Badgley Phelps: financial planning & wealth managementhttps://www.badgley.com/Wealth managementFinancial servicesEconomyIndustryOutlookFinancial outlookurn:uuid:446af444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/03/10/four-ways-to-prepare-for-retirementWealth managementFinancial servicesFour ways to prepare for retirement<p><em></em><em>By </em><a href="https://www.badgley.com/people/jeff-walters"></a><a href="https://www.badgley.com/people/jeff-walters"><em>Jeff Walters</em></a></p><video src="https://www.badgley.com/videos/default-source/default-video-library/badgley-phelps_four-ways-to-prepare-for-retirement_f1.mp4?sfvrsn=6e829248_2" controls="true" width="500" height="281"></video><p>&nbsp;</p><p>Retirement looks different these days. You&rsquo;ll probably live longer and want to retire earlier, so you&rsquo;ll need to save more. Here are four ways to prepare. </p><ol><li><strong>Know your number</strong>
<p>A quick way to estimate is to multiply your current expenses by 25. For example, if your current expenses are $70,000 annually, you&rsquo;ll need to save $1.75 million for retirement. </p></li><li><strong>Invest wisely</strong>
<p>Compound interest is your best friend. Invest early with a diversified portfolio that maps to your timeframe, goals and risk tolerance. </p></li><li><strong>Play defense </strong>
<p>Keep an emergency fund of three to six months&rsquo; worth of expenses for life&rsquo;s little surprises. And take steps to protect your identity&mdash;since identity theft can cost thousands.&nbsp; </p></li><li><strong>Reduce taxes</strong><br />Plan charitable contributions that can help reduce your <a href="https://www.badgley.com/blog/post/blog/2018/08/17/minimize-your-tax-burden-in-retirement-with-a-partial-roth-ira-conversion"></a><a href="https://www.badgley.com/blog/post/blog/2018/08/17/minimize-your-tax-burden-in-retirement-with-a-partial-roth-ira-conversion">tax burden</a>, such as direct gifts, indirect gifts and split-interest gifts. <br /></li></ol><p>And remember, retirement planning is about <a href="https://www.badgley.com/blog/post/blog/2018/03/07/retirement-planning-is-about-more-than-just-money">more than just money</a>.
It&rsquo;s also important to think about where you&rsquo;ll want to live and how you&rsquo;ll want to spend your time in order to minimize surprises down the road. </p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/contact-us"><img src="https://www.badgley.com/images/default-source/cta/retirementplanningquestions_cta.png?sfvrsn=d7839248_1" sf-size="100" alt="" /></a>Tue, 10 Mar 2020 21:10:07 Zurn:uuid:3c69f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/02/26/an-update-on-coronavirus-and-the-financial-marketsWealth managementFinancial servicesEconomyAn update on coronavirus and the financial markets<p>The recent outbreak of the coronavirus has introduced volatility in what had otherwise been a rather complacent market.&nbsp;When COVID-19 was officially recognized by China, their government initiated extreme lockdown conditions in Hubei province.&nbsp;Earlier this month, the growth in new cases in the region started trending lower and the coronavirus initially seemed contained within China, or at least the Pan-Asian region.&nbsp;This generated hope that it was subsiding and would remain primarily as a localized health issue. Unfortunately, there has been an increase in cases reported in other parts of the world with the recent flare ups in Italy and Iran.&nbsp;&nbsp; &nbsp;</p><p>The coronavirus is a serious health issue. While the human impact is clearly the primary concern, there is also a global economic effect and that has generated volatility in the financial markets. In the U.S., the financial impact to date is a heightened level of concern that has generated falling stock prices and rising demand for safe haven assets such as U.S. Treasuries. In terms of specific stocks, companies in segments such as energy, industrials, travel and those with a retail presence in China are likely to be most heavily affected. In addition, companies that source products or inputs from China are likely to experience supply chain disruptions causing at least a temporary hit to earnings.<br /></p><p>We have been fortunate. There are few recent historical cases of viral outbreaks and no one can say exactly how the coronavirus will progress. However, a study of recent market history can provide context. A review of the outbreaks of SARS, H1N1-swine flu, the Ebola virus and the Zika virus indicate that public health issues can take an enormous human toll. These outbreaks were all brought under control and the financial impact in each case was limited. In some cases, heightened levels of fear led to a sharp sell-off in equity prices, but the market rebounded relatively quickly. We cannot say that the same pattern will occur again, but history suggests that a patient approach is prudent. <br /></p><p>It is too soon to determine the potential economic impact of the coronavirus.&nbsp;Earnings for the first quarter will undoubtedly be negatively impacted, but that may only be a temporary setback if the virus is brought under control. In terms of the economy, we may experience a slower growth rate, but loose monetary policy combined with sustained fiscal stimulus should help cushion the blow.&nbsp;Furthermore, the Federal Reserve can lower interest rates providing additional stimulus, if needed. In fact, the current Fed Fund Futures contracts indicate that between two to three interest rate cuts are anticipated by the end of 2020.&nbsp; <br /></p><p>The outbreak of the coronavirus is of serious concern, but the ultimate economic consequences remain in question. In the coming days and weeks, we will closely monitor developments to assess the impact and determine if more aggressive action is necessary. Of course, we will keep you apprised as our thinking and approach evolves.&nbsp; </p><p>&nbsp;</p><hr /><p>&nbsp;</p><p><a href="https://www.badgley.com/blog/post/blog/2020/02/19/themes-from-q4-2019-earnings-season"><img alt="WantMoreOnMarketTrends_CTA" src="https://www.badgley.com/images/default-source/cta/wantmoreonmarkettrends_cta.png?sfvrsn=43579548_4" sf-size="9122" /></a></p><br />Wed, 26 Feb 2020 18:09:01 Zurn:uuid:b768f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/02/25/the-next-generation-critical-money-conversations-with-your-young-childWealth managementFinancial servicesThe next generation: critical money conversations with your young child<p><em>Part 2 of 4&nbsp;</em></p><p>Young children don&rsquo;t understand money conversations as well as teens or younger adults, but it&rsquo;s never too early to start helping them develop attributes and vocabulary they&rsquo;ll need later. Studies suggest that habits <a href="https://www.psychologytoday.com/us/blog/school-thought/201502/study-finds-habits-in-children-take-root-age-9" target="_blank">take root</a> in children as young as age nine. Here are three conversations to have with your young child. <br /></p><h5 style="color:#000000;">Conversation #1: grit </h5><p>According to the book <a href="https://www.amazon.com/Grit-Kids-Perseverance-self-confidence-perseverance-ebook/dp/B01MG19963/ref=sr_1_3?gclid=CjwKCAiA3abwBRBqEiwAKwICA0YBgaj18bpa48D3m_3rp64SzmF1OiQYOrH0GtUkraWH2q2-y6010RoC4d4QAvD_BwE&amp;hvadid=241594599043&amp;hvdev=c&amp;hvlocphy=9033281&amp;hvnetw=g&amp;hvpos=1t1&amp;hvqmt=b&amp;hvrand=5497206495874503299&amp;hvtargid=aud-837858999240%3Akwd-182163025712&amp;hydadcr=15492_10339794&amp;keywords=grit+for+kids&amp;qid=1577735303&amp;sr=8-3"></a><a href="https://www.amazon.com/Grit-Kids-Perseverance-self-confidence-perseverance-ebook/dp/B01MG19963/ref=sr_1_3?gclid=CjwKCAiA3abwBRBqEiwAKwICA0YBgaj18bpa48D3m_3rp64SzmF1OiQYOrH0GtUkraWH2q2-y6010RoC4d4QAvD_BwE&amp;hvadid=241594599043&amp;hvdev=c&amp;hvlocphy=9033281&amp;hvnetw=g&amp;hvpos=1t1&amp;hvqmt=b&amp;hvrand=5497206495874503299&amp;hvtargid=aud-837858999240%3Akwd-182163025712&amp;hydadcr=15492_10339794&amp;keywords=grit+for+kids&amp;qid=1577735303&amp;sr=8-3" target="_blank">Grit for Kids</a> by Lee David Daniels, &ldquo;People that have grit are extraordinarily resilient and are willing to put in the effort to get things done. The reason they are motivated to do so is that they are driven by an overriding purpose. In
other words, they are a car traveling on a road and following a map with a destination. Just like on any road trip, detours and slow traffic can happen. Having grit allows people to overcome these obstacles.&rdquo; <br /></p><p>Teaching kids grit is about having conversations around&mdash;and enforcing&mdash;them to take on responsibilities. Discuss chores, allowances and family financial goals with your kids&mdash;highlighting their personal responsibilities to the household.
Sticking to the plans you lay out, and enforcing consequences when responsibilities are neglected, helps children feel purposeful and learn how to persevere. <br /></p><h5 style="color:#000000;">Conversation #2: commitment to family</h5><p>Involve young children in family meetings&mdash;formal and informal gatherings of family members from every generation where the estate and other financial matters are discussed. Allowing even the youngest members of the family to be a part of the discussion
and ask questions will help give them a sense of purpose and responsibility. Strive to answer each question; there&rsquo;s no need to go into great detail, but children can feel frustrated and lose interest in the process if their questions go unanswered.
Help them find their voice at the table and expand your relationship by asking them questions. <br /></p><h5 style="color:#000000;">Conversation #3: philanthropy and gifting</h5><p>Introduce philanthropy to young children with conversations about charitable organizations that appeal to you personally&mdash;and help identify those that are meaningful to your child. <br /></p><p>The idea of &ldquo;gifting&rdquo; starts at a young age, too. When there&rsquo;s a gift-giving opportunity like a holiday or birthday and kids are expected to give a gift, discuss appropriate price ranges and why that matters. Discuss how a gift for a
grandparent may be a different price range than a gift for a school friend. If you child is having a birthday party, introduce the idea of choosing a charity as a benefactor. Instead of accepting gifts, ask for a small donation or a gift for a specific
charity, such as the local children&rsquo;s hospital.&nbsp; This can have an impact not only on your child, but their friends too!<br /></p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/blog/post/blog/2017/03/31/beyond-the-piggybank-raising-fiscally-fit-kids"><img alt="" src="https://www.badgley.com/images/default-source/cta/gobeyondthepiggybank_cta.png?sfvrsn=808d9248_1" sf-size="100" /></a>Tue, 25 Feb 2020 20:05:57 Zurn:uuid:d967f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/02/19/themes-from-q4-2019-earnings-seasonIndustryOutlookThemes from Q4 2019 earnings season<p><em>February 18, 2020</em></p><p>Although the calendar indicates we have started a new decade, many investment trends from the past several years remain constant. In late January and early February, many companies report year-end 2019 results. Continuing the recent theme, companies are
stating that consumer spending remains strong and the slow-but-steady U.S. economic expansion is intact. However, new to 2020 are concerns about the coronavirus COVID-19, which seems to be a topic of frequent commentary but rare quantification. </p><p>Consumers have been a bright spot in the economy for several years, and management commentary is confirming economic data which indicate high consumer confidence and spending as well as low unemployment. Many retail companies report earnings later than
other businesses, so we will hear more color on purchasing trends in the next several weeks. Early indications are that individuals increased their spending during the holiday season, with e-commerce taking market share from brick-and-mortar stores.
Additionally, the rollout of new streaming entertainment services continues, yet market share gains by one service are not necessarily coming at the expense of others. Cord cutting does continue to negatively impact the cable bundle. </p><p>Another trend that we have observed management teams talking about more frequently is the importance of paying attention to environmental, social and governance (ESG) factors. Consumer companies have been focused on their environmental stewardship, and
now other sectors are joining the dialogue as well&mdash;financials, utilities and technology firms, to name a few. Many management teams believe ESG investing will play an important role in the future of their business and are touting their virtues
on those metrics. </p><p>In technology, an area of notable strength over the last several years, solid corporate spending trends continue. Management teams are prioritizing spending on cloud-based technology as business processes and customer experiences move online. Companies
are fast-tracking expenditures related to modernizing their business models to incorporate omnichannel purchases and delivery. In addition, data growth is increasing exponentially and storing and analyzing this information is a top priority. </p><p>Business confidence has improved further resulting from the Phase One trade resolution with China as well as Brexit coming to fruition without major upheaval. Both events removed a source of uncertainty for management teams. Resolving these outstanding
questions has allowed companies to move forward with plans. Some management teams have also commented about positive trends in the construction sector which is another positive indicator of business confidence. </p><p>Companies with exposure to China (either for revenue or on the input cost side) are issuing guidance that they may be at risk for downward revisions due to the potential outcomes related to the coronavirus COVID-19. Management teams generally expect a
negative impact from the virus to dampen quarterly results but anticipate the impact to be short lived. One sector which has been particularly affected by the virus is energy, where a substantial portion of oil demand comes from China. Another group
which is disproportionately impacted by the virus is retailers with a presence in China. Many of these companies have closed local stores or paused production in the region until conditions improve. &nbsp;
</p><p>In summary, many trends from the recent past continue to play out in early 2020. Corporate management teams continue to report that consumers are strong, and recent commentary on business investment and confidence may be improving somewhat. The relatively
new outbreak of the coronavirus presents a near-term risk to some companies and we will continue to monitor its progression. However, the general tone regarding the outlook for business has been one of optimism.</p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/search-results?indexCatalogue=blog&amp;searchQuery=economic&amp;wordsMode=0"><img src="https://www.badgley.com/images/default-source/cta/economicupdatescta.png?sfvrsn=31b29248_1" sf-size="100" alt="" /></a>Wed, 19 Feb 2020 18:26:33 Zurn:uuid:9064f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/01/21/the-next-generation-why-you-should-have-critical-money-conversations-with-your-kidsWealth managementFinancial servicesThe next generation: Why you should have critical money conversations with your kids<p><em>Part 1 of 4</em></p><p>More and more millennials are living at home. According to a 2019 study by Zillow, 22 percent of people ages 23 to 27 are living with their parents, nearly doubling from 11.7 percent in 2001. And a recent report from Merrill Lynch says that more than
half of younger millennials say they can't keep up their lifestyles without help from their parents, with 75 percent of these young adults defining success as &ldquo;financial independence from their parents.&rdquo; </p><p>All of this can present a financial toll and emotional drag for parents. That&rsquo;s why it&rsquo;s critical to have money conversations throughout childhood so your children are better prepared for the financial milestones ahead and to leave the nest
as independent, fiscally minded young adults. </p><h5 style="color:#000000;">Your kids are watching you</h5><p>According to research by TIAA, people&rsquo;s financial habits and retirement planning are shaped by their parents&rsquo; experiences. For many millennials, watching how their parents handle&mdash;and struggle in&mdash;retirement has influenced their
drive to do better. As quoted in <a href="https://www.barrons.com/articles/how-your-retirement-affects-your-kids-retirement-51560081600"></a><a href="https://www.barrons.com/articles/how-your-retirement-affects-your-kids-retirement-51560081600" target="_blank">Barron&rsquo;s</a>,
&ldquo;61 percent of respondents said they are taking a different approach to finances to avoid making the same mistakes as their parents.&rdquo; The adage rings true: &ldquo;Give a man a fish, and you feed him for a day. Teach a man to fish, and
you feed him for a lifetime.&rdquo;</p><h5 style="color:#000000;">Overcoming fear of critical money conversations with kids</h5><p>It&rsquo;s never too early or too late to discuss the concept of money and personal finances with your children. However, some parents avoid these conversations because they feel they&rsquo;re not good role models with money management, don&rsquo;t feel
they know enough about money to teach about it or they perceive philosophical differences regarding money between the generations. They also might lack the confidence to talk to their kids about it in a positive way. </p><p>A big step in overcoming these fears is embracing honesty. Be transparent and explain to your child what you&rsquo;re doing, why you&rsquo;re doing it and how to do it. If you don&rsquo;t understand something yourself&mdash;or can&rsquo;t answer one of
their questions&mdash;instead of saying &ldquo;I don&rsquo;t know,&rdquo; say &ldquo;I need to learn more about this too.&rdquo; Explain the difference between wants, needs and tradeoffs using real life examples they can understand. </p><p>Studies suggest that habits <a href="https://www.psychologytoday.com/us/blog/school-thought/201502/study-finds-habits-in-children-take-root-age-9"></a><a href="https://www.psychologytoday.com/us/blog/school-thought/201502/study-finds-habits-in-children-take-root-age-9" target="_blank">take root</a> in children as young as age nine. Creating and fostering an environment where children feel they can have open conversations about money will help them become productive members of society who can confidently and knowledgably
set out into the world on their own. </p><p>Over the next weeks, we&rsquo;ll share more about critical money conversations you can have with your kids. </p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/blog/post/blog/2017/03/31/beyond-the-piggybank-raising-fiscally-fit-kids"><img alt="" src="https://www.badgley.com/images/default-source/cta/gobeyondthepiggybank_cta.png?sfvrsn=808d9248_1" sf-size="100" /></a>Tue, 21 Jan 2020 17:01:05 Zurn:uuid:0664f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/01/13/two-key-ways-the-secure-act-affects-retirees-and-near-retireesWealth managementFinancial servicesTwo key ways the SECURE act affects retirees and near-retirees<p>Late in 2019, Congress passed the SECURE Act&mdash;which stands for Setting Every Community Up for Retirement Enhancement. Among the many changes to IRAs, 401(k)s, other retirement plans, and several non-retirement provisions, there are two key ways the
SECURE Act has a direct impact on retirement income and estate planning for retirees and near-retirees.</p><ol><li><strong>Elimination of the &ldquo;stretch&rdquo; IRA provision</strong>. With the new act, most inherited IRAs must be fully distributed within ten years following the year of inheritance. Previously, an inherited IRA could be distributed over the
lifetime of the beneficiary. This typically meant that tax deferral would continue for a longer period of time if the beneficiary was younger than the decedent. For many beneficiaries, this change will result in a tax increase and may push beneficiaries
into a higher tax bracket&mdash;especially if the account is inherited during peak earning years.<br /><br /></li><li><strong>A change in the start age for Required Minimum Distributions (RMDs) from 70&frac12; to 72</strong>. This is in effect for people who had not turned 70&frac12; as of 12/31/19. In addition to allowing taxes to defer slightly longer, this also
simplifies a somewhat confusing rule, with the timing of RMDs potentially impacted by whether you turned 70&frac12; in the first or second half of the year. It is important to note that taxpayers who are between 70&frac12; and 72 as of the end
of 2019 will need to continue to take their RMDs under the old schedule.</li></ol><h5 style="color:#000000;">Impacts and opportunities for retirees and near-retirees</h5><p>There are several impacts and opportunities associated with these changes. First, while the RMD age was changed to 72, the Qualified Charitable Distribution (QCD) timing did not change. This means that taxpayers who turn 70&frac12; this year can still
make a QCD even though the RMD is not required.</p><p>Second, the elimination of the &ldquo;stretch&rdquo; IRA provision will have an impact on current estate planning. Now is a good time to meet with your estate planning attorney to evaluate a possible need to change beneficiaries. Specifically, if your
IRA currently has a trust named as the beneficiary, it is important to review the trust document and related beneficiaries in compliance with the new rule. This change to the code could also impact asset location between taxable and retirement accounts,
and asset allocation targets of individual portfolios. </p><p>Additionally, these changes make it even more important to educate the next generation financially. The &ldquo;stretch&rdquo; IRA arguably provided an artificial curb for spending down inherited IRAs. &nbsp;Now, most beneficiaries will need to distribute
100 percent of an inherited IRA within ten years. Adjusting taxable investments during the inherited IRA distribution years may help to reduce total income tax expenses. Finally, at the margins, partial Roth conversions prior to age 72 may be more
attractive given the delay in the start of RMDs and the fact that your beneficiaries may face a higher tax bracket due to the elimination of the &ldquo;stretch&rdquo; inherited IRA provision.</p><p>If you&rsquo;re in or near retirement, now is a good time to meet with your wealth manager to discuss changes associated with the SECURE Act. If you have questions regarding any of the other provisions of the SECURE Act such as the creation of multi-employer
401(k) plans for your business, or the college planning implications of the bill, we can help with those as well.</p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/blog/post/blog/2018/11/29/financial-planning-in-retirement"><img alt="" src="https://www.badgley.com/images/default-source/cta/learnfinancialplanningretirement_cta.png?sfvrsn=618d9248_1" sf-size="100" /></a>Mon, 13 Jan 2020 16:42:00 Zurn:uuid:2863f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2020/01/06/meet-our-team-q-a-with-paul-horngFinancial servicesWealth managementMeet our team: Q&A with Paul Horng<p>This month, meet Fixed Income Manager <a href="https://www.badgley.com/people/paul-horng"></a><a href="https://www.badgley.com/people/paul-horng">Paul Horng</a>, a Texas Longhorns-loving father of two daughters who enjoys podcasts and helping clients understand how movements in interest rates impact their portfolios. </p><p><strong>Q: Will you please briefly describe your job?</strong><strong><br />A: </strong>As the taxable fixed income manager, I am both chief cook and bottle washer for corporate bonds. In addition to closely following movements in interest rates, I am focused on purchasing bonds of high quality businesses that generate strong free cash flow and are committed to a disciplined use of debt. I also serve as a member of the Multi-Strategy team. </p><p><strong>Q: What&rsquo;s your favorite thing about your position and/or about working at Badgley Phelps? </strong><strong><br />A:</strong> I enjoy watching global events unfold and their real-time impact on the financial markets, yet my favorite thing is the breath of the work. As both a CFA<sup>&reg;</sup> Charterholder and a CFP<sup>&reg;</sup> professional, I find the ability to work with colleagues and clients on a variety of areas rewarding. The range of work spans from meeting with clients to discuss their portfolios, to teach-ins on stock concentration to conversations on interest rates and durability of competitive advantages. This ensures that no two days are alike.</p><img src="https://www.badgley.com/images/default-source/blog/20501_fy19_bp_employeepaulhorng_1000x500_r12.jpg?sfvrsn=3b8a9248_1" sf-size="100" alt="" /><p><strong>Q: What do you like to do when you&rsquo;re not at the office? </strong><strong><br />A: </strong>My wife and I have two vivacious daughters, ages three and six. Time out of work is primarily spent with them. Raising children involves both teaching and learning, and I enjoy both of those processes. While they are still very much in the early stages, my hope is that they will ultimately become the accomplishment I am most proud of. I also enjoy cooking and attending Orangetheory workouts. </p><p><strong>Q: What&rsquo;s the last book you read? </strong><strong><br />A: </strong>Robert Iger&rsquo;s <em>The Ride of a Lifetime</em> was the last book I read. While it is enlightening to read a biography of Disney&rsquo;s CEO, I particularly appreciate his insider&rsquo;s view of how the company navigated a difficult transition period in the early 2000s. </p><p>His perspective on Disney&rsquo;s strategy amid a rapidly changing media landscape highlighted the importance of Disney&rsquo;s commitment to creating high-quality content but also the flexible mindset required to willingly disrupt a highly profitable business to ensure the future prosperity of Disney. </p><p>Lastly, the book also serves as a reminder that there is more besides the numbers. As a financial analyst, I am prone to trying to boil everything down to numbers, yet ultimately, business of all shapes and sizes are about people&mdash;and treating people with decency and respect goes a long way. </p><p><strong>Q: What, in your opinion, is the greatest game in history? </strong><strong><br />A: </strong>As a University of Texas alumnus and a native Houstonian, the greatest game in history must be the 2006 Rose Bowl where Texas Longhorns defeated the USC Trojans for the BCS National Championship. </p><p><strong>Q: What&rsquo;s your favorite app? </strong><strong><br />A: </strong>My favorite app is Overcast. It&rsquo;s a podcast player that allows you to increase the speed of the podcast. Since hearing is your fastest sense, this allows you to take full advantage of it without degrading your comprehension. Why listen to something at 1.0x speed when you can listen to it at 2.0x? </p><hr /><p><a href="https://www.badgley.com/people"><img src="https://www.badgley.com/images/default-source/cta/whoweare_cta.png?sfvrsn=12ea9248_0" sf-size="8719" alt="WhoWeAre_CTA" /></a></p>Mon, 06 Jan 2020 23:57:36 Zurn:uuid:1262f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/12/27/markets-fueled-by-improving-sentiment-and-an-expected-uptick-in-global-growthWealth managementOutlookFinancial outlookEconomyMarkets fueled by improving sentiment and an expected uptick in global growth<p><em>December 12, 2019</em></p><h5 style="color:#000000;">Outlook: First quarter 2020</h5><h4>Economy</h4><p>After peaking at a growth rate of 3.1 percent in the first quarter of 2019, the pace of the expansion in the U.S. economy has moderated, hovering around 2 percent. The modest rate of growth has been driven by the bifurcated state of our economy which
contains pockets of strength and weakness. Spending by consumers and the U.S. government has been solid, serving as the primary factors underpinning the recent expansion. In contrast, business investment and related capital expenditures declined in
the second and third quarters of 2019. The drivers of the reduced investment include slowing global growth and uncertainty related to the trade dispute between the U.S. and China. Looking forward, growth is expected to remain close to the long-term
trend, coming in around 2.0 percent. Strength from the Federal Reserve&rsquo;s easy monetary policy and a healthy consumer is expected to be juxtaposed against improving, but disciplined investment policies by businesses as well as a moderation in
the growth of government spending. <br /></p><p>In foreign economies, growth is expected to rebound in 2020 fueled by a number of factors. Sentiment is poised to improve given the de-escalation in trade relations between the U.S. and China as well as the anticipation of an orderly Brexit. In addition,
central banks around the world continue to pursue unusually accommodative monetary policies and many countries are simultaneously employing stimulative fiscal programs. The combination of improving sentiment and expansionary
policies is anticipated to create a more robust global economy in the coming year.<br /></p><h4>Inflation</h4><p>Inflation moderated in the summer of 2019 with the Consumer Price Index falling to 1.65 percent last June. However, an uptick in energy and housing prices drove the November CPI up to 2.1 percent. That is a level consistent with the Federal Reserve&rsquo;s
long-term target and an environment of sustainable growth. Looking forward, we expect price levels to remain contained given the prevalence of structural drivers. Structural headwinds create long-term suppressants to higher prices and include factors
such as the proliferation of technology and our aging population. <br /></p><h4>U.S. Dollar</h4><p>The U.S. dollar has declined in recent months driven by lower U.S. interest rates and expectations for a rebound in foreign economies. The optimism has been driven by improving sentiment around the trade relationship between the U.S. and China, expectations
for an orderly Brexit and sustained stimulus by foreign central banks. Looking forward, we expect the U.S. dollar to remain elevated and trade close to its recent range. <br /></p><h5 style="color:#000000;">Asset class</h5><h4>Cash/Money Market Instruments</h4><p>Reflective of the three cuts to Federal Funds Rate in 2019, money market rates are down approximately 90 basis points since the beginning of the year. The sharp decline in cash and money market rates is not anticipated to continue. In fact, guidance from
members of the Federal Reserve suggests our central bank will pause on further rate changes for the foreseeable future. Their change in stance is predicated on a number of factors including the improvement in both market sentiment and economic fundamentals.
Given the stance of the Federal Reserve, short-term rates are expected to remain close to current levels in the coming months.&nbsp;</p><h4>Intermediate Government/Credit Bonds</h4><p>Bond yields declined in 2019 given the moderation in economic growth. However, corporate bond spreads, for both single A rated, and BBB rated bonds have continued to grind tighter. The persistent tightening has driven spreads to the low end of their historical
range and reflects both increased optimism towards continued economic growth as well as the insatiable appetite for yield. Given the current outlook, we expect interest rates and credit spreads to remain range-bound, close to current levels, in the
coming months.&nbsp;</p><h4>Tax-Exempt Municipal Bonds</h4><p>Following a strong year in 2019, it is hard to make a case for a meaningful decline in bond demand in 2020. Only an unlikely reversal in the U.S. tax overhaul or an unexpected global economic event seem powerful enough to cause such a shift. Beginning
the year with low absolute yields, we think total returns for municipals will be relatively modest in the coming year. However, the credit fundamentals of the sector are poised to remain stable. Consistent with recent trends, key challenges for this
segment of the market relate to underfunded pensions and our ever-growing health-care expenses.&nbsp;&nbsp;</p><h4>U.S. Equity </h4><p>Better than expected earnings, a de-escalation in trade tensions with China and a global wave of central bank stimulus drove stocks to record levels in 2019. Looking forward, we expect the stock market to continue its upward trajectory, driven by an increase
in earnings growth and a modest rebound in the global economy. Sustained monetary stimulus as well as improving sentiment from both the phase one trade deal with China and expectations for an orderly Brexit are expected to foster an improving global
environment. While we are positive in our outlook, we expect intermittent bouts of volatility as the development of a comprehensive trade framework with China will be an ongoing process and the trajectory of the economic expansion will exhibit some
volatility from quarter to quarter. <br /></p><h4>International Equity</h4><p>In 2019 international equities had one of their best years since the Great Recession. In response to a weakening global economy, central banks worldwide eased their policies and some governments have implemented stimulative fiscal programs. These pro-growth
stances, coupled with improving sentiment from the de-escalation in the trade dispute and anticipation of an orderly Brexit, provided an improving backdrop for international stocks. As we progress into 2020, we expect these drivers and relatively
attractive valuations to allow foreign stocks to continue their upward trend. However, intermittent bouts of volatility are to be expected as noted in the U.S. equity outlook above. &nbsp;</p><h4>Commodity </h4><p>Commodity prices generally increased last year, but in the aggregate the gains were modest relative to the rise in prices for other assets. Oil prices were the outlier with an increase of nearly 30 percent in 2019 driven by fading recession fears as we
progressed through the year. Precious metals also performed well given a significant amount of skepticism toward equities throughout much of 2019. Looking forward, we expect the continuation of the economic expansion to result in rising prices for
source inputs, but the modest pace of growth will continue to act as a headwind to large, and broadly based, increases in commodity prices.<br /></p><h5 style="color:#000000;">Potential opportunities &amp; risks</h5><h4>Opportunities</h4><p><strong>The emergence of new technologies</strong>&mdash;The convergence of cloud computing, significant increases in computing power and the advent of the smartphone have created a connected world in which new technologies change the way we live. This
convergence has created a number of investment opportunities centered around long-term themes in which disruptive companies can capture high levels of market share in a relatively short period of time. <br /></p><p><strong>The evolution of finance</strong>&mdash;Technological advancements are disrupting traditional methods of banking, finance and transfers of cash. For example, we are experiencing a global shift from paper currency to electronic payments fueled
by the popularity of credit and debit cards. Electronic bill paying services and companies that facilitate cash transfers are also experiencing strong demand. This shift is still in its early stages and is expected to have a long runway as it is occurring
across both the developed and the developing economies. <br /></p><p><strong>A shift to easier monetary policy</strong>&mdash;Central banks worldwide have adopted an easing stance which provides support for the equity markets and a continuation of the economic expansion. The Federal Reserve was one of the drivers of the
market downturn in the fourth quarter of 2018 after providing guidance that suggested they would raise rates significantly. One year later central bankers worldwide have rapidly shifted policy in the other direction. Notably, recent comments from
Jerome Powell, Chairman of the Federal Reserve, suggest our central bank is inclined to leave rates low until there is evidence of sustained inflationary pressure. <br /></p><h4>Risks</h4><p><strong>Low growth rates &amp; rising asset prices</strong>&mdash;Monetary policy has shifted to an easing bias as growth rates for earnings and the economy moderated last year. Recently, sentiment has improved, and investors are expecting a better global
economic environment in 2020. If growth does not improve as expected, asset values may decline. <br /></p><p><strong>Trade disputes &amp; rising protectionist sentiment</strong>&mdash;Trade tensions between the U.S. and China de-escalated as we closed out 2019. However, the degree to which the existing tariffs will be removed, if at all, is not clear at the
time of this writing. In addition, the development of a comprehensive trade framework with China will be an ongoing process that will take time. In terms of our trade with Canada and Mexico, Congress made good progress on the USMCA trade agreement
in the closing stages of 2019. While there is more work to do on that agreement, it appears to be moving in the right direction. If new trade frameworks are not developed, tariffs are likely to be a persistent issue, resulting in a headwind to the
global economic expansion. <br /></p><p><strong>Increasing government regulation of technology companies</strong>&mdash;Several of the leading technology companies have established dominant market positions and have few competitors. If the power of these companies continues to increase, government
regulators may place them under greater scrutiny by assessing their privacy policies, acquisition plans and competitive practices.<br /></p><p><strong>Geopolitical risks</strong>&mdash;Conflicts in many parts of the world have escalated or have near-term catalysts that may result in a change in dynamics. We continue to monitor events across the Middle East and the South China Sea. <br /></p><p><strong></strong><strong>Debt related issues</strong>&mdash;Sovereign debt levels continue to grow throughout much of the world, generating conditions associated with low rates of economic growth. In response to the low growth rates, there has been a
meaningful shift in the willingness to use fiscal policy to stimulate these economies. However, if the initiatives are debt-financed, they run the risk of exacerbating the issue and creating more significant problems in the long-term.&nbsp;</p><p><strong>Cybersecurity</strong>&mdash;Cybersecurity has become a significant issue as evidenced by the Equifax data breach as well as persistent attacks on both the international money transfer system, SWIFT, and on systemically important financial institutions.
The global cost of cybercrime has been estimated at $600 billion and acts as a tax or headwind to economic growth.</p><p>&nbsp;</p><hr /><p>&nbsp;</p><p><a href="https://www.badgley.com/blog/post/blog/2019/10/01/economic-update-a-mixed-picture-points-to-a-continuation-of-modest-growth"><img src="https://www.badgley.com/images/default-source/cta/wantmoreonmarkettrends_cta.png?sfvrsn=43579548_4" sf-size="9122" alt="WantMoreOnMarketTrends_CTA" /></a></p><p><br /></p>Fri, 27 Dec 2019 17:00:31 Zurn:uuid:6662f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/12/23/8-books-our-staff-members-hope-to-read-or-gift-this-holiday-seasonWealth management8 books our staff members hope to read or gift this holiday season<p>It&rsquo;s been a busy year&mdash;so busy that our to-be-read books are stacking up. With some holiday downtime ahead, here are eight books we&rsquo;re hoping to read by the fire this holiday season&mdash;or even gift to friends and family. </p><h4>FICTION</h4><p><a href="https://www.indiebound.org/book/9780385543781" target="_blank"><em>The Testaments</em></a> <strong>by Margaret Atwood</strong></p><p>Winner of the Booker Prize, The Testaments picks up in the Republic of Gilead more than 15 years after the events of The Handmaid&rsquo;s Tale. Those of us who read the first book and/or watched the Hulu series are looking forward to this one. </p><h4>NONFICTION</h4><p><a href="https://www.barnesandnoble.com/w/midnight-in-chernobyl-adam-higginbotham/1129511685?ean=9781501134616#/"></a><a href="https://www.barnesandnoble.com/w/midnight-in-chernobyl-adam-higginbotham/1129511685?ean=9781501134616#/" target="_blank"><em>Midnight in Chernobyl</em></a> <strong>by Adam Higginbotham</strong></p><p>A New York Times Best Book of the Year and a Kirkus Reviews Best Nonfiction Book of the Year, this story of the &ldquo;world&rsquo;s greatest nuclear disaster&rdquo; is reported to be gripping from the first page to the last. </p><h4>PERSONAL FINANCE</h4><p><a href="https://www.amazon.com/White-Coat-Investor-Personal-Investing/dp/0991433106"></a><a href="https://www.amazon.com/White-Coat-Investor-Personal-Investing/dp/0991433106" target="_blank"><em>The White Coat Investor: A Doctor&rsquo;s Guide to Personal Finance and Investing</em></a> <strong>by James M. Dahle, MD</strong></p><p>We hear this book, written as a guide to teach doctors how to invest, is relevant for high net worth individuals in any sector&mdash;anyone who is highly educated but untrained in investing, estate planning, or asset protection. </p><h4>AUDIOBOOK</h4><p><a href="https://play.google.com/store/audiobooks/details/Talking_to_Strangers_What_We_Should_Know_about_the?id=AQAAAEDMcDAw7M&amp;hl=en_US"></a><a href="https://play.google.com/store/audiobooks/details/Talking_to_Strangers_What_We_Should_Know_about_the?id=AQAAAEDMcDAw7M&amp;hl=en_US" target="_blank"><em>Talking to Strangers: What We Should Know About the People We Don't Know</em></a> <strong>by Malcom Gladwell</strong></p><p>The author of Freakonomics and Outliers and host of the podcast Revisionist History narrates his book about what to keep in mind when interacting with people we don&rsquo;t know.</p><h4>CHILDREN&rsquo;S</h4><p><a href="https://www.indiebound.org/book/9780803736801"></a><a href="https://www.indiebound.org/book/9780803736801" target="_blank"><em>Dragons Love Tacos</em></a> <strong>by Adam Rubin</strong></p><p>This New York Times bestselling picture book will be fun to read with kids and grandkids this holiday season. Who knew dragons loved chicken tacos? We hear the audiobook is great, too! </p><h4>MEMOIR</h4><p><a href="https://www.indiebound.org/book/9780316505116"></a><a href="https://www.indiebound.org/book/9780316505116" target="_blank"><em>Maid: Hard Work, Low Pay, and a Mother's Will to Survive</em></a> <strong>by Stephanie Land</strong></p><p>Featured on practically every book list out there, this journalistic look at the untold stories of people who take care of others&rsquo; yards and homes is intriguing. </p><h4>POETRY</h4><p><a href="https://www.amazon.com/Deaf-Republic-Poems-Ilya-Kaminsky-ebook/dp/B07GDD1BFV/ref=sr_1_1?crid=2J2CRCFDHW3GV&amp;keywords=deaf+republic+ilya+kaminsky&amp;qid=1576004330&amp;s=digital-text&amp;sprefix=deaf+republic%2Cdigital-text%2C214&amp;sr=1-1"></a><a href="https://www.amazon.com/Deaf-Republic-Poems-Ilya-Kaminsky-ebook/dp/B07GDD1BFV/ref=sr_1_1?crid=2J2CRCFDHW3GV&amp;keywords=deaf+republic+ilya+kaminsky&amp;qid=1576004330&amp;s=digital-text&amp;sprefix=deaf+republic%2Cdigital-text%2C214&amp;sr=1-1" target="_blank"><em>Deaf Republic </em></a><strong>by Ilya Kaminsky</strong></p><p>Amazon describes this collection, a finalist for both the National Book Award for Poetry and the T.S. Eliot Prize, as &ldquo;an astonishing parable in poems&rdquo; that asks, &ldquo;What is silence?&rdquo;</p><h4>E-READER</h4><p><a href="https://www.amazon.com/Present-over-Perfect-Leaving-Frantic/dp/B01IAIZH5G/ref=sr_1_1?gclid=CjwKCAiAob3vBRAUEiwAIbs5TkpAmi9ffk8OJ-ERfFjxkljEcrasUS_bvmxMxN2hq2lJLip9C8wvqhoCZuUQAvD_BwE&amp;hvadid=174219711106&amp;hvdev=c&amp;hvlocphy=9060230&amp;hvnetw=g&amp;hvpos=1t1&amp;hvqmt=e&amp;hvrand=165898539526976697&amp;hvtargid=kwd-145575209586&amp;hydadcr=22560_9636789&amp;keywords=present+over+perfect&amp;qid=1576004598&amp;sr=8-1"></a><a href="https://www.amazon.com/Present-over-Perfect-Leaving-Frantic/dp/B01IAIZH5G/ref=sr_1_1?gclid=CjwKCAiAob3vBRAUEiwAIbs5TkpAmi9ffk8OJ-ERfFjxkljEcrasUS_bvmxMxN2hq2lJLip9C8wvqhoCZuUQAvD_BwE&amp;hvadid=174219711106&amp;hvdev=c&amp;hvlocphy=9060230&amp;hvnetw=g&amp;hvpos=1t1&amp;hvqmt=e&amp;hvrand=165898539526976697&amp;hvtargid=kwd-145575209586&amp;hydadcr=22560_9636789&amp;keywords=present+over+perfect&amp;qid=1576004598&amp;sr=8-1" target="_blank"><em>Present Over Perfect: Leaving Behind Frantic for a Simpler, More Soulful Way of Living</em></a> <strong>by Shauna Niequist with a forward by Brene Brown</strong></p><p>Among Amazon&rsquo;s &ldquo;Great on Kindle&rdquo; reads is this bestselling book filled with hacks to help declutter your life with what Publishers Weekly calls a &ldquo;satisfying blend of mindfulness, scripture, and self-help.&rdquo; </p><p>We wish you and yours some cozy reading time this holiday season! </p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/blog/post/blog/2019/12/09/year-end-financial-planning-tips"><img alt="" src="https://www.badgley.com/images/default-source/cta/thinkaboutyearendtaxsavings_cta.png?sfvrsn=cb8b9248_1" sf-size="100" /></a>Mon, 23 Dec 2019 22:37:50 Zurn:uuid:a45bf444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/12/09/year-end-financial-planning-tipsWealth managementFinancial servicesIndustryYear-end financial planning tips<p><em>By <a href="https://www.badgley.com/people?t=financial-planners">Financial Planning Team</a></em></p><p>Holiday plans and tasks can dominate our &ldquo;to do&rdquo; lists this time of year. It is also the time to consider some year-end tax saving and planning strategies. We think these should be at the top of your list. </p><h5 style="color:#000000;">Tax-loss harvesting</h5><p>Looking at taxable accounts, selling certain taxable investments at a loss could offset any capital gains you&rsquo;ve realized during the year. If you have underperforming positions that would generate a capital loss if sold, consider selling them prior
to the end of the year to offset realized capital gains for the year. If your losses exceed your gains, you can use up to $3,000 of the excess losses to offset your ordinary income. Any additional losses beyond the $3,000 annual limit may be carried
forward for use in future years. </p><p>When using this strategy, be aware of the IRS &ldquo;wash-sale&rdquo; rules which prevent you from deducting losses on the sale of a security if you buy back the same security within a 60-day period&mdash;30 days before the sale and 30 days after the
sale.
</p><h5 style="color:#000000;">Required minimum distributions</h5><p>If you are over 70&frac12; and have IRAs or other retirement accounts, don&rsquo;t forget to take your required minimum distribution (RMD) before the end of the year. The RMD is a taxable distribution that must be taken each year. If the RMD is not taken
correctly it could result in a penalty of up to 50 percent. One option to save on taxes is to donate all or a portion of your RMD to charity. This is called a Qualified Charitable Distribution (QCD). A QCD counts toward your annual RMD and is excluded
from your taxable income so long as it does not exceed the annual $100,000 limit.</p><h5 style="color:#000000;">Flexible spending accounts</h5><p>Don&rsquo;t forget the funds you set aside in your flexible spending account for 2019. These funds are used for expenses related to the special purpose of the fund. The accounts may pay for eligible medical, dental, vision and/or dependent care costs.
Verify the rules under your plan to determine if you may rollover unused funds into 2020. If your balance exceeds the permissible rollover amount, plan to spend the balance on qualified expenses before the end of the year. </p><h5 style="color:#000000;">Defer income and accelerate expenses</h5><p>Income you receive in 2019 is considered taxable in 2019. If your employer allows you to defer your year-end bonus, consider deferring some income from 2019 to 2020. The delay of the sale of capital gain property and receipt of distributions into 2020
can also help reduce this year&rsquo;s taxable income. Deferring into the next tax year only makes sense if you expect to be in the same or lower tax bracket for next year.</p><p>Since the Tax Cuts and Jobs Act of 2017 nearly doubles the standard deduction, fewer taxpayers itemize their deductions&mdash;a game changer for many who previously itemized deductions. For some taxpayers, it may make sense to strategically accelerate
and pre-pay certain tax-deductible expenses&mdash;bunching into a single year what they had planned to pay over two years and benefit from itemized deductions this year and not next year. Boosting their total itemized deductions beyond the standard
deduction will also allow them to deduct part of the medical and dental expenses they have paid. Consider pre-paying qualified medical expenses&mdash;the threshold for qualified medical expenses for 2019 is 10 percent of your Adjusted Gross Income
(AGI). </p><h5 style="color:#000000;">Gifts and donations</h5><p>During the holiday season, it seems timely to make gifts to support your favorite charitable organization and realize deductions, and/or give to loved ones and maximize your annual gift exclusions.</p><p>The most common type of charitable contributions are direct cash gifts; however, gifting appreciated stock to your favorite charity may provide additional tax benefits. Not only will you be able to take an income tax deduction for the fair market value
of the stock, you will also remove this stock&rsquo;s accumulated capital gains from your portfolio. Another option is the QCD strategy mentioned above for taxpayers over 70&frac12;. An advantage of the QCD strategy over the other options is it directly
reduces taxable income rather than being subject to the standard deduction.</p><p>Because of the increased standard deduction, many charitable givers may no longer receive a tax benefit from their normal charitable giving. Although this is technically related to bunching your itemized deductions, charitable giving may be one of the
easiest ways to reduce your taxable income by pulling future years&rsquo; charitable giving into the current tax year. Donor advised funds (DAFs) are a handy tool for charitably-inclined, tax-savvy individuals. Consider making an irrevocable donation,
equal to several years&rsquo; worth of charitable gifts, to a donor advised fund before the end of the year. You can deduct the entire donation in the current tax year and control the disbursements to the charities of your choice over multiple years.
</p><p>For estate planning purposes, in 2019, the IRS allows you to make tax-free gifts of up to $15,000 per year ($30,000 for married couples) to as many individuals as you&rsquo;d like. These gifts will not be subject to federal gift taxes and will not be
considered taxable income for the recipient. Apart from making direct cash gifts, consider contributing these tax-free gifts to a 529 plan for your children/grandchildren. Contributions to a 529 plan grow tax-deferred and withdrawals used for eligible
educational expenses are tax-free. </p><p>Additionally, a special provision of 529 plans allows you to front-load the plan using an accelerated gifting schedule by contributing a lump sum of $75,000 ($145,000 if married filing jointly) in the first year of a five-year period without creating
a taxable gift. This clearly amplifies the wealth transfer potential and is worthy of careful consideration. For example, a married couple with four grandchildren could reduce their taxable estate up to $600,000 by contributing to four separate 529
plan accounts without consuming part of their lifetime gift exemption.</p><h5 style="color:#000000;">Roth conversions</h5><p>If you&rsquo;ve thought about taking advantage of the market&rsquo;s volatility to convert part or all of your Traditional IRA or retirement plan assets, enough of the year has passed that you should be able to project the potential tax impact. People
find Roth Conversions helpful for two reasons: First, there may be future tax benefits to doing a conversion now if you expect your future income to be taxed at a higher rate, such as avoiding the &lsquo;&rdquo;tax torpedo&ldquo;&mdash; a sharp rise
in a taxpayer&rsquo;s marginal tax rate caused by the taxation of Social Security benefits and required minimum distributions from IRAs at age 70&frac12; &mdash; or to mitigate the effect of Medicare premium surcharges on high-income retirees . Other
factors to consider include your current and anticipated future income tax rates, when you begin to withdraw and your time horizon. Second, as an estate planning consideration, it may make more sense to leave your Roth IRA assets to your heirs and
traditional IRA assets to charities. As each person&rsquo;s income tax experience can vary significantly, it is best to consult with your professional advisors to understand your options and carefully consider the consequences before you decide to
convert part or all of your Traditional IRA or retirement plan assets. </p><h5 style="color:#000000;">Review spending and set goals for 2020</h5><p>This is a good time of year to review your spending from 2019 and set priorities going forward. There are many good resources for this such as Quicken or other online trackers. Identify any large expenses planned for next year and make sure there is a
source to fund them. If you received a raise or year-end bonus, consider how much of that you would like to save and invest.</p><h5 style="color:#000000;">Financial checklist</h5><p>In addition to the year-end strategies above, consider making and reviewing an annual financial checklist. As a starting point, you can find our sample checklist <a target="_blank" href="https://www.badgley.com/docs/default-source/default-document-library/bp_2019_year-endchecklist_f1.pdf?sfvrsn=feb59248_2">here</a>. This is particularly important if you or your family have experienced any major life
events this year, such as marriage or divorce, births or deaths, or a job change&mdash;or have major life events on the horizon. These uncomplicated tasks can prevent serious consequences if otherwise overlooked. </p><p>&nbsp;</p><hr /><p>&nbsp;</p><a target="_blank" href="https://www.badgley.com/docs/default-source/default-document-library/bp_2019_year-endchecklist_f2.pdf?sfvrsn=80b59248_2"><img src="https://www.badgley.com/images/default-source/cta/getthechecklist_2019_cta.png?sfvrsn=24b59248_1" sf-size="100" alt="" /></a>Mon, 09 Dec 2019 16:26:38 Zurn:uuid:cc5bf444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/11/27/three-tips-for-raising-philanthropic-childrenIndustryWealth managementFinancial servicesThree tips for raising philanthropic children<p>Dubbed &ldquo;National Philanthropy Month&rdquo; and boasting both National Philanthropy Day and Thanksgiving, November is a month for giving thanks&mdash;and for charitable giving. That&rsquo;s why now is a great time of year to reflect on how you can pass on your attribute of giving to your children so that the philanthropic spirit continues in your family during the month of November and beyond. Here are three tips for raising philanthropic children: &nbsp;</p><p><strong>1. Remember that it&rsquo;s not all about money</strong>. <br />According to <a href="https://givingusa.org/giving-usa-2019-americans-gave-427-71-billion-to-charity-in-2018-amid-complex-year-for-charitable-giving/" target="_blank">Giving USA</a>, Americans gave $427.71 billion to charity last year, up slightly from 2017. But it&rsquo;s important to teach children that giving goes beyond money. Time and influence are gifts as well. <a href="https://www.all4kids.org/2018/11/16/national-philanthropy-month-how-to-teach-kids-about-charity/" target="_blank">All4Kids.org</a> suggests setting up a donation box in the home to provide an easy place to pass on household goods and clothes to a more needy cause. &nbsp;&ldquo;Kind gestures have big impact&hellip;Dedicating time to uplift someone else can strengthen relationships and be very rewarding.&rdquo;</p><p><strong>2. Focus on what you care about</strong>. <br />Instead of giving a little to a lot of charities, focus on giving your time and money to organizations that matter to you&mdash;and explain to your children why they are important to you. Talk about how you&rsquo;ve supported these organizations over time and what types of things the organizations have been able to accomplish with the help of people like you. Ideally, this approach will stick with them as they grow and make their own decisions on how to give. </p><p><strong>3. Do your homework but stick to your gut</strong>. <br />According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S. Deciding where to donate time, money and other resources can be daunting. Through friends and in school, children will hear about opportunities to get involved. Teach them to research the organizations by showing them how you researched the charities you support&mdash;but also to trust their own judgement. <a href="https://blog.ted.com/how-to-pick-the-charity-thats-right-for-you/" target="_blank">TED.com</a> says, &ldquo;Ask the charity to provide you with program data that tracks their activities&mdash;and ask how they measure their own progress&hellip;But note, it doesn&rsquo;t necessarily matter if the organization is effective. Some problems can be extremely difficult to solve, and you don&rsquo;t want to punish the charities working on those problems&mdash;otherwise we&rsquo;ll only get charities working on easy problems. Think about if you had asked Jonas Salk how effective he was one year before he found the cure for polio. He would not have been very effective at that point, but that doesn&rsquo;t mean you would not have wanted to invest in him.&rdquo;</p><p>Remember that for children to absorb what you&rsquo;re trying to teach them, ongoing conversations are better than one-and-done. Talk with your children at the dinner table about philanthropists you admire or reflect on world issues. When they&rsquo;re older, volunteer together or read books about inspiring individuals. Establish philanthropic rituals during the holidays and beyond. A lifetime of learning about philanthropy alongside adults who model this behavior will help set them up to be charitable adults. </p><hr /><a href="https://www.badgley.com/blog/post/blog/2018/04/11/build-a-philanthropic-legacy-and-save-money-on-taxes-with-donor-advised-funds"><img alt="" src="https://www.badgley.com/images/default-source/cta/threetipsphilathrophykids_cta.png?sfvrsn=44b59248_1" sf-size="8678" /></a>Wed, 27 Nov 2019 21:27:48 Zurn:uuid:2b5bf444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/11/26/themes-from-the-3q-earnings-seasonEconomyWealth managementFinancial servicesThemes from the Q3 2019 earnings season<p><em>November 26, 2019</em></p><p>As the third quarter earnings season concludes, we have observed several themes from company reports and the accompanying management discussions. These comments suggest the macroeconomic environment is still favorable, even though the economic expansion began more than ten years ago. Furthermore, a closer look reveals that consumers are relatively strong while business spending and investment are mixed. We also found shifts in spending patterns that are impacting many industries and help to explain some of the competitive dynamics across the business landscape today.</p><p>Consumers are generally healthy and continue to spend, although buying habits are changing. Many brick-and-mortar retailers have struggled to attract customer traffic as purchasing decisions are made online in lieu of venturing to a store. E-commerce is growing rapidly as a purchasing channel and companies are moving quickly to adapt their business models. For many retailers, this involves a combination of technology and website upgrades as well as adjusting their delivery implementation as customers have grown to expect faster and less expensive shipping. </p><p>Consumer spending trends outside of retail remain stable. The housing sector continues to be healthy, although the growth rate of repair and remodel activity has slowed somewhat in recent years. Consumers are also continuing to prioritize travel experiences, with strong global air traffic trends and increasing demand for flights worldwide. However, the way in which people vacation is evolving and the industry is adapting to meet changing preferences. Individuals are frequently turning to the internet to book travel arrangements and their choice of providers has increased as more companies have entered this highly competitive space. At the same time a transformation is also occurring in the lodging industry as demand has grown overall, but travelers continue to show strong interest in booking vacation homes over traditional hotels.</p><p>Loan issuance at banks and credit card companies confirm the trends of a strong consumer and a relatively cautious business community. Credit card companies, and those segments within large banks, generated solid earnings growth reflecting strong demand for consumer loans and high levels of household spending. In contrast, the Federal Reserve reports that commercial and industrial loan growth has been steadily decelerating this year, despite significant reductions in interest rates, with growth peaking in the first quarter of 2019 at 9.6 percent only to fall to 1.8 percent in Q3.&nbsp; </p><p>Business investment has been relatively weak due to uncertainty on several fronts. The trade dispute between the U.S. and China, weakness in foreign economies and the process of Britain exiting the European Union have all been drivers of a cautious tone. In particular, the trade dispute has been a catalyst for some businesses to change their supply chains, while others have pre-purchased the basic materials and source inputs used in manufacturing their products. This frontloading of purchases caused order books to become increasingly uneven from quarter to quarter as inventory is being closely managed. Furthermore, some large capital expenditure decisions are being postponed until management teams have clearer visibility into the global trade framework that will evolve in the coming years. </p><p>Despite the uncertainty surrounding the macroeconomic environment, technology companies have been a beneficiary of the recent trends in business spending. While companies have been reluctant to build new plants or invest in heavy equipment, they are spending on technology, including migrating processes and data to cloud-based providers. Over time, this creates efficiencies and helps offset cost pressures in other parts of the business. This will be a secular trend and we expect demand for technology solutions to remain robust for the foreseeable future.</p><p>In totality, the most recent series of earnings reports from companies has proven to be slightly more favorable than most investors expected. Consumers remain an area of strength, and corporations, while cautious, remain positive. In the aggregate, the current fundamentals suggest the economic expansion is intact, but will be characterized by the modest growth we have experienced over much of the last ten years. They also suggest that industries related to retail, travel and technology, among others, will continue to see rapid change as recent trends are sustained. </p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/search-results?indexCatalogue=blog&amp;searchQuery=economic&amp;wordsMode=0"><img src="https://www.badgley.com/images/default-source/cta/economicupdatescta.png?sfvrsn=31b29248_1" sf-size="100" alt="" /></a> Tue, 26 Nov 2019 15:28:19 Zurn:uuid:795af444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/11/20/how-changes-in-financial-services-might-impact-youIndustryHow changes in financial services might impact you<p>The financial services industry is in a state of change, becoming more gender diverse, customized, and preparing for the largest wealth transfer ahead. As explained in this <a href="https://www.cnbc.com/2019/02/22/how-to-prepare-your-heirs-for-the-68-trillion-great-wealth-transfer.html"></a><a href="https://www.cnbc.com/2019/02/22/how-to-prepare-your-heirs-for-the-68-trillion-great-wealth-transfer.html" target="_blank">CNBC</a> article, &ldquo;Baby boomers are set to pass to their children a mind-boggling $68 trillion&mdash;the biggest generational wealth transfer ever.&rdquo; That means that the youngest generation will become in control of the wealth&mdash;and the decisions about financial advisers. Following are three things to keep in mind about the changes happening in financial services. </p><p><strong>1. Expect financial firms to become more gender diverse. </strong><br />The CFP Board works to address the lack of gender diversity within the financial planning profession so that it can cater to the needs of our increasingly diverse population. </p><p>&ldquo;Women are increasingly in charge of the household nest egg,&rdquo; says Director of Financial Planning and Wealth Manager <a href="https://www.badgley.com/people/julie-parisio-roy"></a><a href="https://www.badgley.com/people/julie-parisio-roy">Julie Parisio Roy</a>. &ldquo;Our industry has already evolved by putting more women on the front lines and at the top of wealth management firms. Developing trusting relationships is imperative. I&rsquo;m seeing more women educating themselves on the importance of the <a href="https://www.badgley.com/blog/post/blog/2017/03/10/is-your-financial-adviser-acting-as-a-fiduciary"></a><a href="https://www.badgley.com/blog/post/blog/2017/03/10/is-your-financial-adviser-acting-as-a-fiduciary">fiduciary standard</a> and researching their options. Our industry needs to be prepared to answer women investors&rsquo; tough questions.&rdquo;</p><p><strong>2. Enjoy a more customized experience. </strong><br />According to Deloitte&rsquo;s &ldquo;<a href="https://www2.deloitte.com/bn/en/pages/financial-services/articles/five-megatrends-change-financial-services.html" target="_blank"></a><a href="https://www2.deloitte.com/bn/en/pages/financial-services/articles/five-megatrends-change-financial-services.html" target="_blank">Five megatrends that will change financial services</a>,&rdquo; the future banking experience will become increasingly customized. &ldquo;Service offerings will evolve to target and meet the needs of each segment or community, moving away form a one-size-fits-all mass market approach.&rdquo; </p><p>We see this customization extending to the financial services industry as a whole, not just banking. And to us at Badgley Phelps, that only makes sense since a tailored approach is in our DNA. With greater access to data, research and analytics than ever before, we create wealth and investment management programs that are customized to address each client&rsquo;s unique needs.</p><p><strong>3. Be prepared to demand transparency.</strong><br />Knowledge is power&mdash;and knowledge comes from transparency. Understanding the investment services and products your adviser recommends, and the underlying fees, will help you evaluate the value of the relationship. Confusing and hidden fees are counterproductive. More than ever, information and data regarding the costs of working with an adviser are available. The SEC has changed the requirements of RIA&rsquo;s regulatory filings to make it easier for investors to evaluate firms. You can learn more <a href="https://www.sec.gov/fast-answers/answersinvadvhtm.html" target="_blank"></a><a href="https://www.sec.gov/fast-answers/answersinvadvhtm.html">here</a>. </p><p>&nbsp;If you need help with financial
planning, please <a href="https://www.badgley.com/contact-us">contact us</a>.</p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/blog/post/blog/2019/08/06/have-you-outgrown-your-wealth-manager"><img alt="" src="https://www.badgley.com/images/default-source/cta/haveyououtgrownyourwm_cta.png?sfvrsn=96b39248_1" sf-size="100" /></a>Wed, 20 Nov 2019 22:58:38 Zurn:uuid:7959f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/11/15/meet-our-team-q-a-with-katie-whamMeet our team: Q&A with Katie Wham<p>This month meet Associate Wealth Manager and Research Analyst <a href="https://www.badgley.com/people/katie-wham">Katie Wham</a>, a curious, barre-loving mom of two with a penchant for research and collaborating with colleagues in order to help clients pursue their financial goals.&nbsp; </p><img src="https://www.badgley.com/images/default-source/blog/20501_fy19_bp_employeekatiewham_600_2.jpg?sfvrsn=ecb09248_1" sf-size="100" alt="" /><p><strong></strong><strong>Q: Will you please briefly describe your job?</strong><br /><strong>A:</strong> I have the privilege of helping clients achieve their financial goals. One of the ways I do this is by recommending investment opportunities that align with their individual objectives. Assessing investment opportunities requires quite a bit of research, which often involves collecting many types of information and distilling those datapoints down into meaningful conclusions. I love to analyze companies and financials, and then turn the numbers into something meaningful. The end result&mdash;seeing our team&rsquo;s recommendations implemented and helping clients reach their goals&mdash;is very rewarding.&nbsp;&nbsp; </p><p><strong>Q: What&rsquo;s your favorite thing about your position and about working at Badgley Phelps? </strong><br /><strong>A:</strong> My favorite thing about my position is that every day is different. I&rsquo;m able to use both my quantitative skills as well as collaboration skills&mdash;both with our fantastic clients and my supportive, thoughtful and engaged teammates. While I love to spend time analyzing companies, my true passion is connecting with people. I&rsquo;m thankful that I get to do both every day. &nbsp;&nbsp;</p><p><strong>Q: What do you like to do when you&rsquo;re not at the office? </strong><br /><strong>A:</strong> I love spending time with my family and friends, playing games, doing a barre workout, traveling, cooking or being outside. My husband and I have two daughters, ages 4 and 2, so exploring the world with them is a really fun experience.&nbsp; </p><img src="https://www.badgley.com/images/default-source/blog/20501_fy19_bp_employeekatiewham_600_3.jpg?sfvrsn=84b09248_1" sf-size="100" alt="" /><p><strong>Q: What&rsquo;s the last book you read? </strong><br /><strong>A:</strong> Do company earnings transcripts count? Some of them feel like novels&hellip;</p><p><strong>Q: What accomplishments are you most proud of? </strong><br /><strong>A:</strong> Professionally, I&rsquo;m proud to be a part of an organization that places our clients&rsquo; best interests above all else. Also, the Chartered Financial Analyst (CFA) designation is a professional accomplishment that I worked hard to attain.&nbsp; </p><p><strong>Q: What motivates you? </strong><br /><strong>A:</strong> I&rsquo;m motivated by curiosity and those who matter to me. I&rsquo;m a naturally curious person and I enjoy learning. In this industry, there&rsquo;s no shortage of information and new ideas, so I&rsquo;m constantly trying to learn something new. And because I enjoy what I do, it&rsquo;s easy to be motivated to do the best I can for my clients, my coworkers and my family.&nbsp; </p><p><strong>Q: What&rsquo;s been your best moment so far this year? </strong><br /><strong>A:</strong> Watching our girls play together during a summer vacation at Clear Lake, Indiana. I grew up in the Midwest and our family has been going to the lake for generations. Being able to share that experience with our daughters and my extended family was pretty special.&nbsp; </p><p><strong>Q: What&rsquo;s your favorite time of day? </strong><br /><strong>A:</strong> My favorite time of day is dusk. There&rsquo;s something calming about watching the sunset and reflecting with gratitude on the day&rsquo;s events.&nbsp; </p><p><strong>Q: What advice to you have for others in financial services? </strong><br /><strong>A: </strong>Although we operate in an industry that&rsquo;s focused on finances, money isn&rsquo;t everything. Doing the right thing is paramount, even if it&rsquo;s not the profit-maximizing option. For me, success means an outcome that places value on personal satisfaction in addition to financial returns. It&rsquo;s a pretty common-sense idea, but one that is sometimes lost in our industry.&nbsp; </p><p>&nbsp;</p><hr /><p>&nbsp;</p><p><a href="https://www.badgley.com/people"><img src="https://www.badgley.com/images/default-source/cta/whoweare_cta.png?sfvrsn=12ea9248_0" sf-size="8719" alt="WhoWeAre_CTA" /></a></p>Fri, 15 Nov 2019 22:13:52 Zurn:uuid:c457f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/11/01/the-economic-implications-of-daylight-saving-timeThe economic implications of daylight saving time<p>Sunday, November 3 marks the end of daylight saving time for the year, and is when we &ldquo;fall back,&rdquo; turning the clocks back one hour. While it may be just a minor nuisance for some, daylight saving time has been shown to be costly for the economy&mdash;which
is why Washington state and others are planning to do away with the switch. Here&rsquo;s a look at the economic implications of daylight saving time.</p><h5 style="color:#000000;">Losing an hour costs money&mdash;that isn&rsquo;t made up</h5><p>According to the <a href="https://sleepbetter.org/Lost-Hour-Economic-Index/">SleepBetter Lost-Hour Economic Index</a>, the total cost of the lost hour when daylight saving time begins every year in March is $434 million nationally and $4 million in the
Seattle-Tacoma area alone. According to the organization, &ldquo;The study focused on only the aspects of economic losses where solid evidence from peer-reviewed academic journals could be obtained, showing how the change can lead to an increase in
heart attacks, workplace injuries in the mining and construction sectors, and increased cyberloafing that reduces productivity for people who typically work in offices. A reasonable economic cost was then developed and applied to the more than 300
Metropolitan Statistical Areas (MSA) in the U.S.&rdquo; Unfortunately, that cost isn&rsquo;t regained in the fall when an hour is added. </p><h5 style="color:#000000;">Losing an hour affects our judgement</h5><p>The &ldquo;spring forward&rdquo; start to daylight saving time has been found to affect our judgement. Sleep-deprived decisions made at the beginning of the period don&rsquo;t just go away when we gain an hour in November. And some decisions are weightier
than others. For example, a recent study called &ldquo;<a href="https://journals.sagepub.com/doi/pdf/10.1177/0956797616678437">Sleepy Punishers Are Harsh Punishers: Daylight Savings Time and Legal Sentences</a>,&rdquo; reports that judges hand out
sentences of 5 percent longer in duration the Monday following the beginning of daylight saving time, as compared with other days of the year.&rdquo;</p><h5 style="color:#000000;">Time changes can impact the stock market</h5><p>According to <a href="https://www.psychologytoday.com/us/blog/markets-in-mind/201310/daylight-saving-time-changes-anxiety-investing">Psychology Today</a>, shifts in sleep patterns can lead to anxiety&mdash;which can lead to anxious investing. &ldquo;We
found the market downturn associated with daylight saving time changes amounted to a single-day loss of $31 billion in U.S. markets, on average.&rdquo; That said, researchers don&rsquo;t recommend drastic measures in preparation for DST. &ldquo;Emotions
can ride even higher than usual under some conditions, including times of sleep disruption such as those associated with daylight saving time changes. By remaining calm and avoiding impulsive, emotion-driven investment decisions, there is no need
to lose sleep over the market.&rdquo;&nbsp; </p><p>&nbsp;</p><hr /><p>&nbsp;</p><p><a href="https://www.badgley.com/contact-us"><img alt="NeedHelpInvestmentStrategy_CTA" src="https://www.badgley.com/images/default-source/cta/needhelpinvestmentstrategy_cta.png?sfvrsn=aa39248_2" sf-size="18753" /></a></p>Fri, 01 Nov 2019 15:00:22 Zurn:uuid:8955f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/10/30/navigating-bonds-that-generate-a-negative-yieldNavigating bonds that generate a negative yield<p>The world is awash with bonds that generate a negative yield. As displayed in the chart below, today roughly $15 trillion of mostly foreign sovereign debt carries negative interest rates where investors pay for the privilege of lending. Simply put, a bond purchased with a negative yield is guaranteed to lose money if held to maturity. </p><img alt="" src="https://www.badgley.com/images/default-source/cimages/globalnegativedebt.jpg?sfvrsn=8dbc9248_1" sf-size="100" /><p><em>Source: Bloomberg</em></p><p>Low interest rates are the result of weaker global economic growth and persistently low inflation. To combat slowing growth, central bankers including both Bank of Japan and the European Central Bank have lowered interest rates to stimulate their economies. Despite their efforts, slow growth is persistent in both Asia and Europe. For example, Japan recently announced that its economy is growing at a rate of just over 1 percent and China, the world&rsquo;s second largest economy, posted its slowest economic growth in nearly 30 years in the second quarter. Germany, which exemplifies the Eurozone and is the largest economy in the region, posted a GDP contraction of 0.1 percent during the second quarter and likely tipped into a recession over the course of the summer. </p><p>The United States has so far avoided negative yields, yet U.S. Treasuries have not escaped the pinch and rates have decreased substantially this year. The 10-year U.S. Treasury hit all-time lows of 1.45 percent in early September and has only posted a modest recovery to close at 1.60 percent since then. </p><p>The chart below displays regions with negative yields in shades of red, and regions with positive yields in shades of green. The more extreme the value, the stronger the shade. While negative rates in the U.S. may seem unimaginable, the search for yield emanating from Asia and Europe will continue to apply pressure on U.S. interest rates. U.S. Treasury rates have room to fall further, yet Federal Reserve Chairman Jerome Powell has indicated the United States will not use negative rates as a policy tool against weakening economic conditions.&nbsp; </p><img alt="" src="https://www.badgley.com/images/default-source/cimages/wb_curves.jpg?sfvrsn=a0bc9248_1" sf-size="100" /><p><em>Source: Bloomberg</em></p><p>As a result of the 2007-2009 Global Financial Crisis, a series of worldwide monetary experiments by various central banks have led to the proliferation of negative interest rates. After other forms of monetary stimulus were exhausted, the Eurozone introduced negative rates in June 2014 to boost a languishing economy with the aim of encouraging banks to lend. Yet negative interest rates have crimped the profitability of poorly capitalized European banks who were already burdened with new financial regulatory reserve holding requirements. Cuts in interest rates have resulted in a flat and sometimes inverted yield curve, threatening the business model of traditional banks which borrow at short term interest rates and lend those funds at longer term rates. Plainly stated, negative interest rates have deleterious effects on the banking system.</p><p>Central bankers in Europe and Japan are now confronted with a reality where cutting short term interest rates, one of their primary tools, appears to be ineffective. In the past, central banks could rely on cutting interest rates to encourage risk taking and spur economic growth. However, additional rate cuts do not appear to have the same impact when yields are already at historically low levels. </p><p>The economic backdrop of slowing global economic growth and projections of a continuation of that trend reinforces expectations of low interest rates. With a likely environment of persistently low interest rates reinforced by sluggish global economic growth, we continue to believe it is wise to hold an allocation of high-quality bonds. Rates in the U.S. are high relative to those offered in Europe and Japan and provide appreciation potential if interest rates fall from current levels. There are also portfolio diversification benefits since a portfolio of high-quality investment grade bonds should act as a ballast for stocks as well.</p><p>&nbsp;</p><hr /><p>&nbsp;</p><p><a href="https://www.badgley.com/contact-us"><img alt="NeedHelpInvestmentStrategy_CTA" src="https://www.badgley.com/images/default-source/cta/needhelpinvestmentstrategy_cta.png?sfvrsn=aa39248_2" sf-size="18753" /></a></p><br />Wed, 30 Oct 2019 16:00:18 Zurn:uuid:0c57f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/10/17/tips-for-making-the-most-of-medicare-open-enrollmentTips for making the most of Medicare open enrollment<p>Medicare open enrollment began this week on October 15 and ends December 7, 2019&mdash;and the enrollment period is the only time of year Medicare participants can make changes to their plans. That&rsquo;s why, if you&rsquo;re a Medicare participant, now is a good time to evaluate your plan to see if you may be able to save money with a few adjustments. The following are several tips on how to make the most out of the Medicare open enrollment period. </p><ol><li><strong>Review your income.</strong> If you are married filing jointly and your Modified Adjusted Gross Income from your IRS tax return two years ago is higher than $170,000, you will pay higher premiums for Part B and prescription drug coverage. So if your income has declined this year due to retirement, for example, you should contact the <a href="https://www.ssa.gov/pubs/EN-05-10536.pdf" target="_blank">Social Security Administration</a> and advise them of your lower income. You may benefit from a premium reduction.</li><li><strong>Review your drug coverage.</strong> Carol McClure of <a href="http://financialdesignsinsurance.com/" target="_blank">Financial Designs, Inc.</a>, reminds Medicare participants that if they&rsquo;re on Medicare, a supplement and Part D plan, it&rsquo;s important to review the Part D plan annually to make sure the plan still covers all of the participant&rsquo;s prescriptions&mdash;particularly if medications have changed during the year.</li><li><strong>Check for spousal discounts.</strong> If married people are both enrolled in regular Medicare plus a supplement, some companies offer discounts that McClure says can save you up to $40 per month. </li><li><strong>Take another look at Medicare Advantage Plans. </strong>According to Kevin Peterson of <a href="https://connexioninsurance.com/" target="_blank">Connexion Insurance Solutions</a>, &ldquo;Many may not be aware that in 2019, Medicare Advantage Plans were granted more flexibility with the supplemental benefits they are allowed to offer to their members including those things not directly considered medical care, like nutrition services and transportation. That change alone means that there may be more factors to consider when comparing your Medicare plan options.&rdquo; </li><li><strong>Make sure your doctor is still covered.</strong> McClure reminds participants to review Medicare Advantage Plan renewal materials to make sure their doctor and hospital are still participating in the plan. If not, this can result in extra costs or the inconvenience of switching to a new doctor and hospital covered by the plan. </li><li><strong>Work with a Medicare Advisor.</strong> Medicare Advantage Plans will ask participants to make several choices, including whether to select a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) plan. Peterson recommends working with a Medicare advisor through the process. &ldquo;There is no charge for their services&mdash;and having someone explain all of the options and assist you in making the right plan selection year after year is invaluable to a person&rsquo;s overall wellness.&rdquo;</li><li><strong>Remember that Medicare supplement insurance can be changed year-round. </strong>&ldquo;Many clients are not aware that their Medicare supplement insurance, also known as Medigap, can be changed year-round in the State of Washington,&rdquo; says Peterson. &ldquo;Medicare supplement plans are standardized, meaning the benefits are identical between the carriers. Many people on a Medicare supplement plan may be overpaying for their benefits. In minutes, a Medicare advisor can tell you if your level and coverage and price are appropriate or if a change is needed.&rdquo;</li></ol><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/contact-us"><img alt="" src="https://www.badgley.com/images/default-source/cta/needhelpmedicare_cta.png?sfvrsn=1fbe9248_1" sf-size="100" /></a>Thu, 17 Oct 2019 19:08:37 Zurn:uuid:3556f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/10/16/a-global-wave-of-central-bank-stimulus-helps-keep-stocks-near-record-highsOutlookA global wave of central bank stimulus helps keep stocks near record highs<h5 style="color:#000000;">Outlook: Fourth quarter 2019</h5><h4 style="color:#000000;">Economy</h4><p>Growth in the U.S. economy is decelerating and is expected to hover around the 1.5 percent to 2.0 percent range. The current drivers of growth are consumer spending, which has been unusually strong, along with a significant amount of government expenditures. In contrast, manufacturing activity and business investment have been soft and are acting as headwind to the expansion. Notably, the deceleration has been a global phenomenon and central banks around the world have boosted their levels of stimulus. In our country, the Federal Reserve has lowered its target interest rate two times since July 31st and announced it is no longer reducing the size of its balance sheet. Looking forward, the futures markets are currently projecting between one
and two more rate cuts by the end of March 2020. Central banks around the world are pursuing similar actions and we have shifted from a period of tightening policy to a global easing cycle. This is a positive development and will help
the expansion to continue, but growth will be modest as many of the issues require structural reform and targeted fiscal policies that have yet to gain traction in many countries around the world.&nbsp; </p><h4 style="color:#000000;">Inflation</h4><p>Inflation has stabilized around 1.5 percent to 2.0 percent in recent months after peaking at close to 3.0 percent in the summer of 2018. Looking forward, we expect price levels to remain contained given the prevalence of both cyclical and structural drivers. From
a cyclical perspective, the slowing pace of economic growth should act as a headwind to inflation. Structural headwinds create long-term suppressants to higher prices and include factors such as the proliferation of technology and our aging
population.&nbsp; <br /></p><h4 style="color:#000000;">U.S. Dollar</h4><p>The U.S. dollar increased relative to many currencies last quarter. Weakening growth prospects in foreign economies, central banks actions to lower interest rates and the proliferation of negative interest rates in Europe and Japan have generated
strong demand for our currency. Looking forward, we expect the dollar to remain elevated given the relative strength of the U.S. economy.<br /></p><h5 style="color:#000000;">Asset Class</h5><h4>Cash/Money Market Instruments</h4><p>Interest rates on cash and money market instruments have steadily declined. After raising rates in December of last year, the Federal Reserve reversed course last quarter with their first rate cut in July and a second reduction in September. Fears of slowing economic growth, and the increasing risk of an eventual recession, remain the primary concerns with several factors including geopolitical issues contributing to heightened anxiety. After the September meeting Federal Reserve
Chairman Jerome Powell attempted to temper expectations of future reductions in rates, but the market is confident they will deliver at least one more cut this year.&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /></p><p>In foreign economies, sluggish economic growth, and in some regions, economic contractions, have led to an increase of negative yielding debt to more than $13 trillion worldwide. Given the soft economic conditions, interest rates are likely to remain
below zero in those regions for the foreseeable future. <br /></p><h4>Intermediate Government/Credit Bonds</h4><p>The difference in yield, or the spread between single A rated corporate bonds relative to U.S. Treasuries, peaked in early January at close to 1.20 percent. Credit spreads tightened through the end of July and currently stand close to the five-year
average at 0.99 percent. The impact of geopolitical events, changes in expectations for economic growth and corporate profits will continue to be expressed via credit spreads. Given the current outlook, we expect interest rates and credit spreads
to remain range-bound in the coming months. <br /></p><h4>Tax-Exempt Municipal Bonds</h4><p>Change in our tax laws, as well as the anticipation of additional rate cuts by the Federal Reserve, continue to attract investors to the municipal bond market. Municipal bond funds and ETFs have seen net inflows every week totaling to $63 billion
through August per Investment Company Institute data. Credit fundamentals have been relatively benign, though underfunded pensions are still a concern. The impact of climate change is getting increasing attention as an underestimated risk
that local economies will have to address, particularly in areas prone to natural disasters. While this may lead to higher issuance in the future, the near-term outlook calls for yields to remain close to their recent trading range.<br /></p><h4>U.S. Equity </h4><p>Better than expected earnings, optimism for a trade deal with China and a global wave of central bank stimulus drove stocks to record levels last quarter. Looking forward, we expect the stock market to continue its upward trajectory, but at a modest
pace relative to the first nine months of the year. As of early October, valuations on equities are slightly above historical norms so we expect earnings to be a primary driver of stock prices in the coming months. Consistent with the
recent past, the progression of trade negotiations with China and policy responses by the Federal Reserve are also significant factors that can swing both market fundamentals and sentiment. Accordingly, we will be closely watching developments
on those fronts and will make adjustments in our forecast as necessary.&nbsp; <br /></p><h4>International Equity</h4><p>International equities declined modestly last quarter given slowing global growth and a strong rally in the U.S. dollar. In local currency terms the developed markets generated gains with positive returns in Europe, Asia and Australia. However,
the rally in the dollar resulted in losses for U.S. investors in those markets. In contrast, the emerging markets generated modest losses in local currency terms and the declines were broadly based. Looking forward we expect foreign markets
to provide mixed results driven by varying economic growth opportunities across regions, ongoing trade negotiations, a strong U.S. dollar and the Brexit transition.&nbsp; <br /></p><h4>Commodity </h4><p>Commodities generally declined last quarter with agriculture, industrial metals and energy prices moving lower. The softening of the global economy impacted cyclical commodities while the trade dispute between the U.S. and China weighed on prices
for agricultural goods. In contrast, precious metals such as gold generated strong gains. Looking forward, we continue to expect the slower pace of global growth to act as a headwind to higher commodity prices but acknowledge that a positive
resolution to the trade dispute or further increases in monetary stimulus could result in at least a short-term rally. <br /></p><h5 style="color:#000000;">Potential Opportunities &amp; Risks</h5><h4>Opportunities</h4><p><strong>The emergence of new technologies</strong>&mdash;The convergence of cloud computing, significant increases in computing power and the advent of the smartphone have created a connected world in which new technologies change the way we live. This convergence has created a number of investment opportunities centered around long-term themes in which disruptive companies can capture high levels of market share in a relatively short period of time.&nbsp; &nbsp;</p><p><strong>The evolution of finance</strong>&mdash;Technological advancements are disrupting traditional methods of banking, finance and transfers of cash. For example, we are experiencing a global
shift from paper currency to electronic payments fueled by the popularity of credit and debit cards. Electronic bill paying services and companies that facilitate cash transfers are also experiencing strong demand. This shift is still
in its early stages and is expected to have a long runway as it is occurring across both the developed and the developing economies.&nbsp; <br /></p><p><strong>A shift to easier monetary policy</strong>&mdash;Central banks have shifted from a tightening bias to an easing stance which provides support for the equity markets and a continuation of the economic expansion. The Federal Reserve was
one of the drivers of the market downturn last year after providing guidance that suggested they would raise rates significantly. Now central bankers worldwide are rapidly shifting policy in the other direction. Despite two rate cuts last
quarter, futures markets suggest the Federal Funds rate will be 75 basis points lower by the latter part of summer next year. At the same time, the European Central Bank and the Bank of Japan are engaged in negative interest rate policies and
quantitative easing programs. China has also taken several steps to boost the level of stimulus this year. </p><h4>Risks</h4><p><strong>Declining growth rates</strong>&mdash;Monetary policy has shifted to an easing bias as growth rates for earnings and the economy have moderated this year. If the deceleration in growth is too dramatic, asset values may decline as well.&nbsp;
<br /></p><p><strong>Trade disputes &amp; rising protectionist sentiment</strong>&mdash;Trade tensions between the U.S. and China remain high and newly imposed tariffs on European goods have opened a potential new front in the negotiations. If the disputes
are not resolved, tariffs are likely to be a persistent issue, resulting in a significant headwind to the global economic expansion.&nbsp; <br /></p><p><strong>Increasing government regulation of technology companies</strong>&mdash;Several of the leading technology companies have established dominant market positions and have few competitors. If the power of these companies continues to increase, government
regulators may place them under greater scrutiny by assessing their privacy policies, acquisition plans and competitive practices.</p><p><strong>Geopolitical risks</strong>&mdash;Conflicts in many parts of the world have escalated or have near-term catalysts that may result in a change in dynamics. We continue to monitor events across the Middle East and in the South China Sea.
<br /></p><p><strong>Debt related issues</strong>&mdash;Sovereign debt levels continue to grow throughout much of the world, generating conditions associated with low rates of economic growth. In response to the low growth rates, there has been a meaningful shift
in the willingness to use fiscal policy to stimulate these economies. However, if the initiatives are debt-financed, they run the risk of exacerbating the issue and creating more significant problems in the long-term.&nbsp;</p><p><strong>Cybersecurity</strong>&mdash;Cybersecurity has become a significant issue as evidenced by the Equifax data breach as well as persistent attacks on both the international money transfer system, SWIFT, and on systemically important financial institutions.
The global cost of cybercrime has been estimated at $600 billion annually, up 20 percent from 2014.</p><hr /><a href="https://www.badgley.com/blog/post/blog/2019/06/05/market-update-volatility-rises-after-strong-rally-in-equity-markets"></a><br /><p><a href="https://www.badgley.com/blog/post/blog/2019/10/01/economic-update-a-mixed-picture-points-to-a-continuation-of-modest-growth"><img alt="WantMoreOnMarketTrends_CTA" src="https://www.badgley.com/images/default-source/cta/wantmoreonmarkettrends_cta.png?sfvrsn=43579548_4" sf-size="9122" /></a></p><br />Wed, 16 Oct 2019 18:17:15 Zurn:uuid:6f4cf444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/10/11/meet-our-team-q-a-with-curtis-pepinMeet our team: Q&A with Curtis Pepin<p>This month meet Director of Marketing and Wealth Manager <a href="https://www.badgley.com/people/curtis-pepin">Curtis Pepin</a>, a longtime team member and outdoorsman with an adorable puppy as his sidekick. </p><p><strong>Q: Briefly describe your job.</strong> <br /><strong>A:</strong> A good portion of my day is spent working closely with clients to develop solutions matched to their short, immediate and long-term goals. I'm also responsible for the planning, development and implementation of the firm&rsquo;s marketing, communications and public relations. </p><p><strong>Q: What&rsquo;s your favorite thing about your position and/or about working at Badgley Phelps?</strong> <br /><strong>A:</strong> The people! Both the Badgley Phelps team and our clients are fantastic. The comradery, communication and dedication I find here at Badgley Phelps is very rewarding. </p><p><strong>Q: What do you like to do when you&rsquo;re not at the office?</strong> <br /><strong>A: </strong>All things outdoors: hiking, biking and skiing. For me, fresh air leads to greater happiness. </p><p><strong>Q: What&rsquo;s been your best moment so far this year?</strong><br /><strong>A:</strong> A family ski tour/mountaineer adventure to Chamonix </p><p><img src="https://www.badgley.com/images/default-source/Blog/20501_fy19_bp_employeecurtispepin_600-1.jpg?sfvrsn=18a59248_2" title="20501_FY19_BP_EmployeeCurtisPepin_600-1" data-displaymode="Original" alt="20501_FY19_BP_EmployeeCurtisPepin_600-1" /></p><p><strong>Q: Do you have a pet? If so, what&rsquo;s his/her name?</strong> <br /><strong>A:</strong> I do! I have a dog named Maverick. He&rsquo;s a 6-month-old Golden Retriever. </p><p><img title="20501_FY19_BP_EmployeeCurtisPepin_600-2" src="https://www.badgley.com/images/default-source/Blog/20501_fy19_bp_employeecurtispepin_600-2.jpg?sfvrsn=9a59248_2" data-displaymode="Original" alt="20501_FY19_BP_EmployeeCurtisPepin_600-2" /></p><p><strong>Q: What&rsquo;s your favorite app?</strong> <br /><strong>A:</strong> Waze. There is no better app to navigate to and from meetings in Seattle traffic. </p><p><strong>Q: What&rsquo;s your favorite time of day?</strong> <br /><strong>A:</strong> I am a morning person. My natural alarm clock seems to ring each day at 5 a.m. Those early hours are my most productive time of the day. </p><p>&nbsp;</p><hr /><p>&nbsp;</p><a href="https://www.badgley.com/people"><img title="WhoWeAre_CTA" src="https://www.badgley.com/images/default-source/cta/whoweare_cta.png?sfvrsn=12ea9248_0" data-displaymode="Original" alt="WhoWeAre_CTA" /></a>Fri, 11 Oct 2019 20:19:19 Zurn:uuid:494af444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/10/01/economic-update-a-mixed-picture-points-to-a-continuation-of-modest-growthEconomic update: a mixed picture points to a continuation of modest growth<p> The current macroeconomic environment provides a mixed outlook, with reasons to be both positive about the state of the economy as well as some areas of concern. The puts and takes of the outlook are translating into growth of approximately 2 percent for our economy, which is modest but consistent with the trend since the beginning of the recovery in 2009. </p>
<p>On the positive side, Presidents Trump and Xi remain in communication despite continuing trade tensions between the U.S. and China, and a face to face meeting is scheduled for October 10. Recently, China has increased their purchases of U.S. agricultural products and there is some optimism that the two sides can agree to terms that will result in a de-escalation of tensions while paving the way for a more significant agreement in the future. Of course, any resolutions on the trade front reduce a significant source of uncertainty in the market and would be positive for stocks. </p>
<p>In addition, U.S. consumers are healthy and corporate earnings growth remains solid. Several retailers have recently commented on the strength of the U.S. consumer, including Home Depot, Target, Walmart, Starbucks, and others. Consumer strength is also evident in spending levels, where recent data show that personal consumption grew more than 4 percent year over year. On the corporate side, companies in the S&amp;P 500 reported earnings growth of about 2 percent and sales growth of about 4 percent last quarter. Many analysts had expected that earnings would decline,&nbsp;but for the second consecutive quarter results were better than had been feared. </p>
<p>To keep the economic expansion intact, central banks around the world have been cutting interest rates and are boosting their levels of stimulus. In fact, the Federal Reserve&rsquo;s rate cut on July 31 was followed by a two-week period in which 18 other central banks followed suit and lowered rates. Notably, low interest rates are supportive of higher equity valuations and are intended to provide an incentive for investors to buy stocks rather than safe-haven assets such as high-quality bonds. </p>
<p>Regarding the housing market, it has been somewhat mixed. On the positive side, low interest rates have resulted in historically inexpensive mortgages, which add to the appeal of homeownership. After a period of stability in issuance of building permits, recent activity has picked up. However, home ownership rates are relatively low, in a historical context, as first-time homebuyers must save enough money for sizeable down payments as well as absorb higher costs from land to construction materials. Even existing homeowners have moderated their spending levels, with private residential investment staying about the same to slightly down since 2018. </p>
<p>On the negative side, global growth is slowing. In Europe, England is dealing with a potential &ldquo;hard exit&rdquo; from the European Union, and the German economy is close to a recession. In the U.S., although companies are projected to grow earnings 8-10 percent next year, those estimates may be revised downward if international economic conditions continue to remain challenging. </p>
<p>In terms of investment on behalf of businesses, continued economic uncertainty has resulted in companies proceeding cautiously with plans for capital spending and hiring. Recent data show capital goods orders declined 1.7 percent year over year, continuing the downward investment trend that started in 2017. Furthermore, gauges of manufacturing activity have slid into contractionary territory for the first time since 2016. </p>
<p>Given the mixed macroeconomic environment, we continue to closely watch leading and coincident indicators as they provide signals of a potential change in the outlook. At this juncture, those indicators suggest the economy is poised for modest growth much like we have seen over the last ten years. In order to navigate through the inevitable ups and downs of the economic cycle, our strategy remains focused on investing in high quality companies with sustainable competitive advantages. We believe companies with these characteristics will continue to be attractive investments over the long term. </p>
<p><hr />
</p>
<a href="https://www.badgley.com/contact-us"><img title="NeedHelpInvestmentStrategy_CTA" alt="NeedHelpInvestmentStrategy_CTA" data-displaymode="Original" src="https://www.badgley.com/images/default-source/cta/needhelpinvestmentstrategy_cta.png?sfvrsn=aa39248_2" /></a>Tue, 01 Oct 2019 16:46:55 Zurn:uuid:fe49f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/09/19/rules-of-inheriting-a-traditional-or-roth-iraRules of inheriting a traditional or Roth IRA<p> Are you a beneficiary of someone else&rsquo;s Roth or traditional IRA? If so, you have an important decision to make regarding how to title your new account. This decision will have an impact on the timing and amount of taxes you pay now and in the future. The rules are different depending on whether the IRA is Roth or traditional, and whether you&rsquo;re a spouse or non-spouse. What follows is a basic overview of the rules of inheriting a traditional or Roth IRA according to the <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary" target="_blank">Internal Revenue Service</a> (IRS). We recommend that you consult with your tax advisor before making a final decision. </p>
<h5><span style="color: #000000;">Traditional IRA: spouse inherits </span></h5>
<p>If you are the surviving spouse, you have two main options: </p>
<ol>
<li> Treat the IRA as your own by transferring the assets into a new or existing IRA; or </li>
<li>Transfer the assets to an inherited IRA. </li>
</ol>
<p>The main difference between the two is that an inherited IRA must be distributed in five years or over your lifetime, while your own IRA will be subject to the same <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds" target="_blank">distribution rules</a> as if it had been yours originally. One important note is that with either of these options, if the decedent is over 70 &frac12; a Required Minimum Distribution (RMD) will need to be made by 12/31 in the year of death. A less popular third option would be to take the entire IRA as a lump sum. In this case the entire distribution is taxable in the year it is taken. </p>
<h5><span style="color: #000000;">Traditional IRA: non-spouse inherits</span></h5>
<p> </p>
<p>If you are a non-spouse beneficiary, you do not have the option of transferring the funds into your own IRA. You can either take a lump sum or transfer the funds to an inherited IRA with distributions beginning in the year after death and continuing over your life expectancy. </p>
<p>Non-spouse beneficiaries often take the opportunity to consider whether <a href="https://www.badgley.com/blog/post/blog/2018/08/17/minimize-your-tax-burden-in-retirement-with-a-partial-roth-ira-conversion" target="_blank">it makes sense to convert a traditional IRA to a Roth IRA. </a></p>
<h5><span style="color: #000000;">Roth IRA: spouse inherits </span></h5>
<p>If you are the spouse and sole beneficiary of a Roth IRA, you have the option to transfer the assets into a new or existing Roth of your own or to an inherited Roth IRA. It is important to note that your own Roth IRA will not have Required Minimum Distributions (RMDs), while the inherited Roth IRA will have RMDs starting in the year the decedent would have turned 70 1/2. In either case there are no income taxes due as long as your spouse&rsquo;s Roth IRA account was held for five years. </p>
<h5><span style="color: #000000;">Roth IRA: non-spouse inherits </span></h5>
<p>As a non-spouse inheriting a Roth IRA you can either take a lump sum distribution (no tax on the earnings as long as the account is more than five years old) or transfer the funds to an inherited Roth IRA. With an inherited Roth IRA you will need to begin taking distributions the year following the death and distribute over five years or over an annuity period representing your life expectancy. </p>
<p>If you will be inheriting a Roth or traditional IRA and would like to discuss your individual situation, please <a href="https://www.badgley.com/contact-us">contact us.</a> </p>
<p><hr />
</p>
<a href="https://www.badgley.com/blog/post/blog/2019/04/01/give-your-kids-a-head-start-on-retirement-with-a-roth-ira"><img title="KidsHeadStartIRA_CTA" alt="KidsHeadStartIRA_CTA" data-displaymode="Original" src="https://www.badgley.com/images/default-source/cta/kidsheadstartira_cta.png?sfvrsn=8da09248_2" /></a>Thu, 19 Sep 2019 16:00:00 Zurn:uuid:2941f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/08/22/exchange-traded-funds-versus-mutual-fundsExchange-traded funds versus mutual funds<p>Pooled investment vehicles have been in existence for over 100 years, but mutual funds ballooned in popularity in the 1980s and 1990s as many &ldquo;Main Street&rdquo; investors desired simple, diversified investment options. Today, the global open-end mutual fund market is over $45 trillion in size, with about $21 trillion in the U.S. (source: ICI). More recently, exchange-traded funds (ETFs) have burst onto the investment stage, garnering over $5 trillion of assets as of March 2019 (source: ICI). The rise of ETFs has primarily come at the expense of mutual funds. Many investors are unaware of the similarities and differences between these two types of pooled investment vehicles, so in this article, we&rsquo;ll explore some of those questions. </p>
<h5><span style="color: #000000;">What is an ETF? </span></h5>
<p>Exchange-traded funds were introduced in the early 1990s and are pooled investment vehicles that allow an investor to gain broad exposure to a diversified basket of stocks, bonds, or other assets. They are traded throughout the day on an exchange at market determined prices, much like stocks.&nbsp; </p>
<h5><span style="color: #000000;">Similarities and differences between ETFs and mutual funds </span></h5>
<p>ETFs and mutual funds both enable investors to pool their money with other investors and gain access to a basket of securities. Exchange-traded funds and mutual funds are registered with the SEC. Both vehicles make it easier for investors to diversify holdings and reduce overall portfolio risk. However, ETFs include some features that distinguish them from mutual funds: </p>
<ol>
<li><strong>Liquidity: </strong>ETFs trade throughout the day whereas mutual funds are priced and traded at the close of the market each day.</li>
<li><strong>Transparency: </strong>The underlying investments in an ETF are disclosed in real time, whereas mutual funds may disclose their holdings on a 60-90 day delayed basis. With ETFs, investors know what they own and the pooled vehicle generally trades at a price that&rsquo;s close to the market value of underlying securities held.</li>
<li><strong>Tax efficiency:</strong> Exchange-traded funds generally do not incur sizeable taxable gains like some mutual funds do because of how the ETF shares are created and redeemed.</li>
<li><strong>Active management:</strong> Most ETFs follow a specific market index or a passive strategy, but mutual funds are often actively managed.</li>
<li><strong>Fee rationality:</strong> ETFs often have lower fees than mutual funds as most are not actively managed and they generally have lower expenses related to distribution. </li>
</ol>
<h5><span style="color: #000000;">ETF advantages </span></h5>
<p>Despite the fact that exchange-traded funds generally replicate passive indexes, they can enable active management of attractive investment opportunities at a low cost and with reliable and continuous liquidity. They also enable investors to gain cost-efficient exposure to the most attractive areas of the global market and provide access to asset classes where it is not time- or resource-efficient to actively manage individual positions. As is the case with many kinds of investments, exchange-traded funds can vary in the quality, liquidity, and leverage of the underlying securities, so we recommend consulting with your wealth manager to determine what is appropriate for your portfolio.&nbsp;<hr />
</p>
<a href="https://www.badgley.com/blog/post/blog/2019/06/12/invest-in-stocks-the-right-way"><img title="InvestInStocksRight_CTA" alt="InvestInStocksRight_CTA" data-displaymode="Original" src="https://www.badgley.com/images/default-source/cta/investinstocksright_cta.png?sfvrsn=13a89248_2" /></a>Thu, 22 Aug 2019 21:05:31 Zurn:uuid:3c3ff444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/08/06/have-you-outgrown-your-wealth-managerHave you outgrown your wealth manager?<p> As you move through life, your wealth management needs can change. An adviser who was perfect for you a decade ago may not be right now. Here are four questions to ask yourself when considering if you need to upgrade your wealth management team: </p>
<ol>
<li>Has my <strong>investable asset value increased</strong> substantially since I originally hired my manager? You may have hired the manager when you had $250,000 and now, through growth and/or additions, your nest egg exceeds a million dollars. Are you now a big fish in a small pond?</li>
<li><strong>Does the expertise of my wealth manager still match up with the complexity of my financial situation?</strong> Has your manager continued his/her education? Does your team include specialists like a Certified Financial Planner&reg;? It&rsquo;s important to consider if your wealth management team has expertise in the areas that are relevant to your current situation. Does your current firm have a team of specialists for financial planning and investment management, or are you working with a generalist? Consider also evaluating the investment offerings of the firm to see if they still make sense. For example, from a tax, cost and flexibility perspective you may benefit from holding your securities directly (in individual stocks and bonds) vs. owning a pooled product such as a mutual fund or exchange-traded fund (&ldquo;ETF&rdquo;). Does your current firm offer these services, and do they have an attractive long-term performance record?</li>
<li><strong>Do I know how much I am paying (in total) for the advice I am receiving?</strong> Thanks to the marketing of discount brokers, investors are realizing that not all costs they are paying are visible. You should have full transparency of what your total costs are as an investor. Make sure you include the direct fees you pay and any indirect costs such as commissions, mutual fund and ETF expense ratios, as well as costs related to any insurance or annuity products you are invested in.</li>
<li><strong>Is my advisor a <a href="https://www.badgley.com/blog/post/blog/2017/03/10/is-your-financial-adviser-acting-as-a-fiduciary">fiduciary</a>?</strong> In the last decade, investors have become more educated on the regulation of the investment industry. A registered investment adviser is required by law to be a fiduciary on an ongoing basis and this duty applies to the entire adviser/client relationship. It encompasses a duty of care and loyalty to provide investment advice in the best interest of the client and eliminating or disclosing any conflicts of interest which would conflict with doing what is best for the client. No other investment professional is required by law to uphold this fiduciary standard. When you ask your wealth manager if they are a fiduciary, make sure to confirm whether this fiduciary duty is applied at all times and not just for specific transactions. </li>
</ol>
<p>Ready to work with someone new? If you think you&rsquo;ve outgrown your wealth manager and would like to see if our team is a better fit, <a href="https://www.badgley.com/contact-us">contact us</a> today. <hr />
</p>
<a href="https://www.badgley.com/blog/post/blog/2016/07/25/questions-to-ask-a-potential-wealth-manager"><img title="ThinkingMakingChange_CTA" alt="ThinkingMakingChange_CTA" data-displaymode="Original" src="https://www.badgley.com/images/default-source/cta/thinkingmakingchange_cta.png?sfvrsn=3ad69248_2" /></a>Tue, 06 Aug 2019 16:00:00 Zurn:uuid:533ef444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2019/07/23/three-reasons-to-sell-your-home-now-instead-of-laterThree reasons to sell your home now instead of later<p> If you&rsquo;re thinking of putting your home on the market, following are three reasons you might want to consider selling in 2019 instead of waiting until 2020. </p>
<p> </p>
<h5><span style="color: #000000;">Reason 1: You could avoid an increase in taxes, depending on where you live.</span></h5>
<p> </p>
<p>An excise tax is a tax on the transfer of ownership of a home and is typically paid by the seller at closing. Depending on where you live, your excise tax could increase next year. Recently, Washington state changed the structure of its <a href="https://www.krem.com/article/news/how-the-new-washington-state-budget-will-affect-your-taxes/293-bd379794-52ee-4130-922f-962568997199" target="_blank">real estate excise tax</a> so that high-dollar properties sold will be taxed more. For example, a home sold for between $1.5 and $3 million will be taxed 2.75 percent in 2020, compared to 1.28 percent in 2019. So, if you sold your $2 million home in 2019, you&rsquo;d pay $25,600 in taxes on the sale&mdash;versus $55,000 in 2020. </p>
<p>That increase is on top of capital gains tax you might pay if you make money on the sale of a home. (Not all home sales are subject to capital gains tax.) High-income taxpayers pay the highest amount of capital gains tax on the sale of a home at 20 percent. Some of that can be excluded, depending on income and filing status&mdash;typically as much as $500,000 on the gain. </p>
<p>According to <a href="https://www.trulia.com/real_estate/Seattle-Washington/market-trends/" target="_blank">Trulia</a>, the median home with four bedrooms or more in the Seattle area saw a 75 percent increase in price between 2009 and 2019. If you bought your home for $2 million in 2009 and sold it for $3.5 million in 2019, with a pre-tax gain of $1.5 million, your capital gains tax burden could be an additional $357,000. So, offsetting that somewhat with lower state excise tax is advised. </p>
<p> </p>
<h5><span style="color: #000000;">Reason 2: A recession could make it harder to sell your home. </span></h5>
<p> While no one can be certain about the future of the economy, the majority of 53 professional economic forecasters surveyed recently by <a href="https://www.nabe.com/NABE/Surveys/Outlook_Surveys/June_2019_Outlook_Survey_Summary.aspx" target="_blank">National Association of Business Economics</a> believe it will continue to grow at a 2.6 percent pace in 2019, but will slow to 2.1 percent in 2020&mdash;and that a recession is possible before the next presidential inauguration. </p>
<p>Selling a house during a recession can mean a slower process, with houses often sitting on the market for longer than they would otherwise. This can result in sellers needing to do more to show and market their homes, such as paying for upgrades and fixes, professional staging and advertising. These things may not be as critically necessary when the economy and real estate market are up. Recessions can also result in flooding in the real estate market, with more sellers than buyers. An abundance of inventory can make it more challenging to sell your home in a timely fashion at the ideal price. </p>
<h5><span style="color: #000000;">Reason 3: Mortgage rates on your next home could be lower. </span></h5>
<p> When you sell your home, you&rsquo;ll likely be in the market for another home that suits your needs. Interest rates are close to historic lows right now and Freddie Mac&rsquo;s recently published <a href="http://www.freddiemac.com/research/forecast/20190617_positive_impacts.page?" target="_blank">mortgage rate forecast</a> predicts that rates for a 30-year fixed rate mortgage (FRM) will rise slightly through the end of 2020 to 4.2 percent. This compares to 3.82 percent at the beginning of June 2019, which is the lowest since September of 2017. While that may not sound like much of an increase, the savings could go toward a remodel or vacation. And, with current market volatility, it&rsquo;s advised to lock in as low a rate as possible now. The U.S. and global economies can influence mortgage rates&mdash;and no one has a crystal ball to know what will happen in 2020. We can only look at historical data to know that rates are low right now. </p>
<p><hr />
</p>
<a href="https://www.badgley.com/contact-us"><img title="LookingAhead_CTA" alt="LookingAhead_CTA" data-displaymode="Original" src="https://www.badgley.com/images/default-source/cta/lookingahead_cta.png?sfvrsn=35d79248_2" /></a>Tue, 23 Jul 2019 16:00:00 Zurn:uuid:e802f444-abe9-6626-a8f8-ff0000ddfb2ahttps://www.badgley.com/blog/blog/2018/08/14/the-financial-implications-of-divorce-five-things-to-consider-before-filingThe financial implications of divorce: Five things to consider before filing<video controls="true" src="https://www.badgley.com/videos/default-source/default-video-library/badgley_financial-planning-for-divorce-video_f1.mp4?sfvrsn=c8d69248_2" width="500" height="281"></video>
<p><em><span style="font-size: 12px;">By <a href="https://www.badgley.com/people/mitzi-carletti">Mitzi Carletti </a></span></em></p>
<p>We&rsquo;ve all heard the cautionary tale that 50 percent of marriages end in divorce. In fact, according to the <a target="_blank" href="https://www.bgsu.edu/ncfmr/resources/data/family-profiles/hemez-divorce-rate-2016-fp-17-24.html">National Center for Family &amp; Marriage Research</a>, the U.S. divorce rate has dropped the last four years measured (2012 &ndash; 2016)&mdash;reaching its lowest point in 40 years. Although the statistics are moving in the right direction, they aren't that comforting when you find yourself on the other side of the data.
</p>
<p>Divorce is extremely emotional, regardless of who initiates it or how amicable it may be. But a divorce decree is final and you won&rsquo;t have the opportunity to renegotiate an unfavorable settlement. That&rsquo;s why it&rsquo;s important to think about the potential financial implications of divorce before you file.
</p>
<h5><span style="color: #000000;">Five things to consider before filing for divorce
</span></h5>
<p style="margin-left: 40px;"><strong>1. It doesn&rsquo;t matter who was at fault.</strong>
<br />
Many states including Washington, Oregon and California have &ldquo;no-fault&rdquo; divorce laws, meaning it doesn&rsquo;t matter to the courts who was at fault or who initiated the divorce. The spouse that is filing for divorce does not have to prove any fault on the part of the other spouse; he or she simply must give any reason the state honors for the divorce.
</p>
<p style="margin-left: 40px;"><strong>2. Where you live can impact the financial outcome of your divorce.
</strong><br />
It&rsquo;s important to know whether you live in a community property or equitable distribution state. In the nine community property states, which include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, all property, including debt, acquired during the marriage is presumed to be the property of the spouses. This means that while both parties own all assets, both parties are also responsible for all debts. In equitable distribution states, it is up to the courts to decide a reasonable distribution of assets and debts.
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<p style="margin-left: 40px;"><strong>3. Tax changes have repealed alimony payment deductions.</strong>
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Previously, spouses paying alimony could deduct it from their taxes, and the receiving spouse had to pay income taxes on the alimony received. Recent tax changes repeal that deduction after 2018. This matters since generally, the spouse paying alimony has a higher income than the spouse receiving alimony and is therefore paying taxes at a higher rate.
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<p style="margin-left: 40px;"><strong>4. Divorce can impact your IRA contributions.</strong>
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According to the IRS, &ldquo;A final decree of divorce or separate maintenance agreement by the end of the tax year means taxpayers can&rsquo;t deduct contributions made to a former spouse's traditional IRA. They can only deduct contributions made to their own traditional IRA.&rdquo;
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<p style="margin-left: 40px;"><strong>5. You may have to pay capital gains tax.</strong>
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If you opt to sell your home during the divorce, both spouses can exclude up to $250,000 in capital gains from their taxable income. Should one spouse continue living in the home but the other remain a co-owner, and they decide to sell later, it&rsquo;s important to document this agreement so that, when sold, both the resident and nonresident owner are still entitled to the $250,000 deduction.
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<h5><span style="color: #000000;">How to prepare
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<p>Divorce is a <a href="https://www.badgley.com/blog/post/blog/2018/02/22/surviving-change-with-financial-planning">major change</a> and it&rsquo;s important to take several steps to be prepared. Thinking about how much it will take to maintain your lifestyle as a single person, review credit card and bank statements for at least one year for insights. Then, take inventory of what you own. It&rsquo;s important to uncover absolutely everything because it can make a difference in what you receive in a divorce and how comfortable your life may be after the decree is final. In addition to researching the value of your real estate investments, personal property, life insurance policies or annuities, take inventory of your investments or stock option plans and identify and quantify liabilities (e.g. mortgage balance, outstanding loans, tax liabilities, credit card debt).
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<p>In addition, it&rsquo;s critical to find the right family law attorney for your unique situation. It will require some work, but it&rsquo;s one of the most important decisions you will make in this process. Take time and identify what is important to you, formulate the questions you need answered before walking into the law office, and interview more than one attorney. This is a critical moment in your life and you want to make certain you are working with someone who is truly listening and understands your goals. Working with an attorney whose values are not aligned with yours will be frustrating and make a difficult process even more trying.
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<p>We recommend you begin by asking for referrals from people you trust and respect. Keep in mind their situation may not be exactly like yours but it is a great place to start. You can also contact your state bar association which often provides a referral service. A good attorney comes at a price but it can be much costlier going it alone.
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<p>Finally, getting the most from your attorney requires being prepared. Have the necessary financial information organized in a presentable form. <a target="_blank" href="https://www.badgley.com/docs/default-source/default-document-library/divorce-financial-checklist_f1.pdf?sfvrsn=48ea9248_2" title="Divorce financial checklist_F1">Use this checklist</a> as a guide when collecting the documents and information you&rsquo;ll need&mdash;ideally prior to meeting with your divorce attorney. This will speed up the process of discovery for the attorney and may be more economical because you are providing the groundwork and they can focus on the big picture.
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<h5><span style="color: #000000;">Surviving divorce
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<p>Divorce may well be one of the most difficult challenges you will face. The process can be trying but you can mitigate that pain by doing your homework, being prepared, selecting the right attorney, and keeping your emotions in check.
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<p>In the words of family-law powerhouse Laura Wasser J.D., &ldquo;Once you do embark upon the separation or divorce process, it is important to remember three key things: Be kind, be reasonable, be brief. Remember that this person will no longer be your spouse, but he or she will continue to be your co-parent, family member and perhaps business partner in certain assets or entities.&rdquo;
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<p><a href="https://www.badgley.com/blog/post/blog/2017/02/14/financial-planning-for-women"><img title="70PercentWealthWomen_CTA2" alt="70PercentWealthWomen_CTA2" data-displaymode="Original" src="https://www.badgley.com/images/default-source/cta/70percentwealthwomen_cta2.png?sfvrsn=20ed9248_2" /></a></p>Tue, 14 Aug 2018 16:00:00 Z